South Korea’s Industrial Bank of Korea (IBK) has embarked on concrete steps to convert into a holding group establishment commanding eight banking and financial companies.

According to sources from the financial and banking industries on Tuesday, the state-run lender last week posted public recruitment for outside consulting company to draw up a mid- to long-term development strategy to build a holding system. It will name a consultant by Jan. 9 and finish outline by March.

The holding organization would command the bank and its eight subsidiaries in charge of businesses ranging from securities, annuity insurances to a Chinese operation in which the bank owns 100 percent stake.

By turning into a holding company, it aims to bolster businesses of its major affiliates including IBK Securities Co. and IBK Asset Management Co. through investment and capital increases to become a holding group specializing in financial services for small- and medium-sized enterprises. “We will hire a consultant to review validity of our plan to become a holding company,” said an official from the bank. “It would take two or three years to make a final decision as any changes to the ownership and governance needs an approval from the government, our primary shareholder,” he added.

Separately, it wants to propose converting preferred stocks without voting rights of which Korea Development Bank and the Export-Import Bank of Korea own 47.9 percent and 6.3 percent respectively into common stocks with voting rights to increase the number of outstanding common shares and help bolster capital base under the Basel Ⅲ standard. The government would have to agree to new issues as its share ratio would fall below 50 percent from current 51.8 percent after the conversion.

As of 1:55 p.m. on Wednesday, shares of IBK fell 1.18 percent to 12,600 won in Seoul trading.

By Chung Seok-woo

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