Korean KB Kookmin Bank Acquires 70% of Cambodia's Prasac Microfinance

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Korean KB Kookmin Bank Acquires 70% of Cambodia's Prasac Microfinance

Post by CEOCambodiaNews »

KB Kookmin Bank accelerates expansion in Southeast Asia
Posted : 2019-12-27 15:19
By Kim Bo-eun

KB Kookmin Bank has begun its drive to expand in Southeast Asia, the top priority of CEO Hur Yin who started his second term in November.

As the first of such efforts, the lender approved a plan Thursday to acquire Cambodia's No. 1 microfinance deposit-taking institution Prasac Microfinance. The bank will take 70 percent of the institution's shares for 702 billion won ($603 million).

Kookmin has been considered a latecomer in terms of global expansion, with the fewest overseas outlets among the four major banks. It has subsidiaries in China, Cambodia and Myanmar.

However, Hur has placed overseas expansion at the center of the bank's strategy for his second year. The plan for the acquisition was unveiled after the CEO visited Cambodia, China and Hong Kong earlier this month ― his first overseas trip marking his second term.

Expansion into fast-growing Southeast Asian markets is becoming crucial as banks face declining profits amid low interest rates here.

Prasac's scale of loans is third-largest among financial firms in Cambodia, including banks. It posted a net profit of 90.7 billion won last year. Its return on equity was 29.4 percent and its net interest margin 8.3 percent.

KB Kookmin Bank has six branches in Cambodia. The Cambodian subsidiary posted a net profit of 2 billion won in the first half of 2019, which is double that of the first half of 2017.
http://www.koreatimes.co.kr/www/biz/201 ... 80966.html
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Re: Korean KB Kookmin Bank Acquires 70% of Cambodia's Prasac Microfinance

Post by Doc67 »

Is this good news or bad news for depositors?

A strong bank behind the acquisition provides strength and stability to Prassac. That's the good news.

However, deposit rates in Korea are low, falling from 2.2% down to 1.6 this year. With plenty of cash themselves from Korea at less than 2%, will they still want to be paying 8% to local depositors?

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Re: Korean KB Kookmin Bank Acquires 70% of Cambodia's Prasac Microfinance

Post by wolfcreek »

Same concern I have......
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Re: Korean KB Kookmin Bank Acquires 70% of Cambodia's Prasac Microfinance

Post by Kammekor »

The spread in Cambodia is well over 6%, sometimes even 8%, that's much more than the spread in Korea.

So the answer is yes.
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Re: Korean KB Kookmin Bank Acquires 70% of Cambodia's Prasac Microfinance

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Re: Korean KB Kookmin Bank Acquires 70% of Cambodia's Prasac Microfinance

Post by Spigzy »

I’ve been inside Kookmin’s disaster recovery Centre in Seoul. It’s like a set from a Bond movie, complete with one way blacked out glass that turns on/off & overviewing all the minions looking at a massive array of screens. I expected Blofeld to walk in any minute!
Meum est propositum in taberna mori,
ut sint Guinness proxima morientis ori.
tunc cantabunt letius angelorum chori:
"Sit Deus propitius huic potatori."
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Re: Korean KB Kookmin Bank Acquires 70% of Cambodia's Prasac Microfinance

Post by Doc67 »

wolfcreek wrote: Sat Dec 28, 2019 11:04 am Same concern I have......
it might be time to roll over for a 2 year period...
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Re: Korean KB Kookmin Bank Acquires 70% of Cambodia's Prasac Microfinance

Post by Bitte_Kein_Lexus »

Doc67 wrote:Is this good news or bad news for depositors?

A strong bank behind the acquisition provides strength and stability to Prassac. That's the good news.

However, deposit rates in Korea are low, falling from 2.2% down to 1.6 this year. With plenty of cash themselves from Korea at less than 2%, will they still want to be paying 8% to local depositors?

Image
Because they can loan at 12%?
Ex Bitteeinbit/LexusSchmexus
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Re: Korean KB Kookmin Bank Acquires 70% of Cambodia's Prasac Microfinance

Post by Doc67 »

Bitte_Kein_Lexus wrote: Sat Dec 28, 2019 12:26 pm
Doc67 wrote:Is this good news or bad news for depositors?

A strong bank behind the acquisition provides strength and stability to Prassac. That's the good news.

However, deposit rates in Korea are low, falling from 2.2% down to 1.6 this year. With plenty of cash themselves from Korea at less than 2%, will they still want to be paying 8% to local depositors?

Image
Because they can loan at 12%?
I think the loan rates at Prassac are nearer 20%. Isn't that the legal limit? So, at 8% deposit that's a nice spread. But, if the new owners can bring in money at 2% and lend it at 20%, then that's surely better than paying locals 8%.
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Re: Korean KB Kookmin Bank Acquires 70% of Cambodia's Prasac Microfinance

Post by armchairlawyer »

Doc67 wrote: Sat Dec 28, 2019 9:55 am Is this good news or bad news for depositors?

A strong bank behind the acquisition provides strength and stability to Prassac. That's the good news.

However, deposit rates in Korea are low, falling from 2.2% down to 1.6 this year. With plenty of cash themselves from Korea at less than 2%, will they still want to be paying 8% to local depositors?
Well, it hasn't stopped ABA paying much more than NBC pays its depositors in Canada, or Hatha paying much more than Krungsri pay in Thailand, or Mitsubishi in Japan.
When assessing the safety of Cambodian banks and MDIs, a big factor (in the absence of deposit protection) is moral hazard. When they have a parent that values its reputation, that is a major plus. Prasac now has a better profile parent.
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