South Korea’s KB Financial Group Inc. said on Thursday that it was named as the preferred candidate to take over the nation’s fifth largest securities firm Hyundai Securities Co. It is said to have offered around 1 trillion won ($873 million), more than 300 billion won above market expectations.

With Hyundai Securities’ 2.8 million added to its customer base of 35 million, KB Financial Group would become unrivalled in local banking industry.

KB Financial Group Chairman and Chief Executive Officer Yoon Jong-kyoo has spearheaded the buyout project with a goal to “strengthen non-banking sector and maximize synergy effect by taking over a large sized securities firm” since he assumed the company’s CEO in Nov. 2014. It is said that the acquisition project had been backed with full support by both the board of directors and CEO Yoon himself as he meticulously prepared for the buyout deal and even reorganized the internal team leading the project. Yoon has continued to take ambitious steps in a bid to build up universal banking business lines by bolstering securities sector to nurture KB Financial Group as a Korean version of Bank of America Merrill Lynch.

The United States-based Bank of America Merrill Lynch is a multinational financial service giant that emerged after Bank of America, which is the largest retail banking service firm in the U.S., took over Merrill Lynch, a strong player in investment banking industry, in 2008.

KB Financial Group had attempted to purchase a large sized securities company for past several years but had failed twice until now as it lost buyout races over Woori Investment & Securities Co. (currently NH Investment & Securities) in 2013 and KDB Daewoo Securities Co. last year. And now it finally is near to reaching the long-cherished target of acquiring securities service firm as it has been selected as t preferred negotiator for Hyundai Securities buyout deal.

Hyundai Securities is the fifth largest securities company in Korea with asset of 22.9 trillion won and capital of 3.3 trillion won, and its total financial asset amounts to 82 trillion won when trust asset of 37 trillion won and financial asset of 45 trillion won are combined. And when KB Investment and Securities Co. and Hyundai Securities are merged together, the coupled entity will become the third largest securities firm in Korea with capital of 3.9 trillion won.

Last year, KB Financial Group succeeded in taking over LIG Life Insurance (currently KB Insurance Co.) and this buyout project on Hyundai Securities will provide the ambitious financial enterprise to establish a foothold in becoming the industry leader.

Furthermore, as Hyundai Securities has proved its strength in real estate project financing among investment bank sectors, it is expected for KB Financial Group that is strong in housing and real estate financing to maximize synergy effect after merger. Hyundai Securities recorded 130 billion won in profits from project financing last year as it grew by 100 billion won in a year after it earned 32 billion in 2014.

Once KB Financial Group finalizes the Hyundai Securities buyout deal, it plans to focus on the project financing market known for high profitability. As KB Kookmin Bank, the core business unit of KB Financial Group, has invested aggressively on social overhead capital projects at home and abroad, and KB Asset Management has stood out in the alternative investment sector, it is anticipated for the financial enterprise to gain synergy within in the group by taking Hyundai Securities under its arm.

“KB Financial Group is expected to achieve its long-term goal of transforming its business structure to enclose multiple non-banking services as well as maximizing profit by diversifying profit structure within the group through the Hyundai Securities buyout deal,” said Park Ji-hye, market analyst at Kyobo Securities Co.

By Chae Soo-hwan and Han Woo-ram

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]