KB Financial needs 2 years to consolidate lenders

Euh Yoon-dae’s decision gives breather to labor unions that oppose any M&A in banks.

KB Financial Group would need as long as two years to become strong enough to spearhead consolidation of South Korea’s overcrowded banking sector, according to the group’s incoming chairman.

While Euh Yoon-dae’s timetable could delay a battle with combative unions who bitterly oppose any acquisitions, analysts reckon he may not be able to stem the momentum.

KB, South Korea’s second-biggest bank by assets, has $4bln to invest and the appointment of Mr. Euh as chairman last week was expected to trigger a long-awaited round of consolidation. But Mr Euh, who currently heads a presidential commission on improving South Korea’s global reputation, insisted he would first have to pump up KB’s stock price when he takes over next month.

“That cannot be done through mergers and acquisitions. That can only be done through making KB more efficient,” he told the Financial Times in an interview, vowing to combat KB’s sagging morale.

Explaining his comments last week that he wanted to buy Woori, South Korea’s largest bank, he replied: “That will be done two years later … I do not want mergers but I want to increase the value to stockholders.”

View the full story in the Financial Times.