Euh stresses banks’ role change for upgrade of Korea’s financial market


KB Financial Group clarified its position that it will not bid to take over the state-run Woori Financial, at least for 2012.

“This year, we have no plan to acquire any financial company including Woori Financial Group and the group’s subsidiaries,” KB Financial chairman Euh Yoon-dae told The Korea Herald on Monday.

His stance comes as government officials and Woori Financial chairman Lee Pal-seung are striving to revitalize the project to privatize the tax money-injected Woori.

KB Financial, one of the two largest financial groups along with Woori, has been seen as a potential bidder for Woori or a Woori subsidiary over the past few years.

Euh said that global financial markets are expected to undergo a worsening business environment this year in the wake of the eurozone debt crisis.

“Accordingly, we will put priority on enhancing the internal power, which involves securing the sufficient capital adequacy, this year.”

Based on thorough risk management, the group will seek to maximize management efficiency by reducing costs and developing customer-oriented products, he stressed.

His remarks mean that the group will focus on generating steady profit through close review of customers’ needs rather than pushing for business expansion.

KB Financial plans to foster the prospective business sectors intensively in the coming months.

The chairman said the sectors include comprehensive real estate management service.

“We will provide customers with profitable investment sources and extend financial loans for the real estate products.”

As part of the group’s effort to be a leading global financial company, he said KB Financial will establish innovative network channels like “smart banking” via high-end cellphones.

Euh said it is significant to set up futuristic network channels to attract younger potential customers to cope with the developing technologies and changes in customers’ need.

Asked about the opinion on requirements for upgrade of Korea’s financial industry, he said “the role of finance should be changed amid rapidly changing environment.”

He said it is not desirable for commercial banks to heavily dependent upon lending to conglomerates.

“Now the enterprises and retail customers don’t just want simple loans,” he said. “Customers want product and services which will satisfy their different needs.”

He cited “investment banking” for corporate customers and “wealth management” for individual customers for necessary business sectors for competitiveness of the local financial market.

Concerning the arguments that local banks have been enjoying hefty earnings and paying excessive dividends, he said the return on equity in the banking industry is not high compared to the major manufacturing companies.

“While some banks saw their ROE stay at 10 percent, or earnings from investment of 20 trillion won, several manufacturing conglomerates post the ROE up to 40 percent,” he said.

In July 2010, Euh was elected as chairman of the group in appreciation of his extensive experience and track record in a wide spectrum of the financial industry, government bodies and academic sphere.

Since his taking office, KB Financial has pushed ahead with strategic tie-ups with global banking groups.

The chairman said he expects that such partnerships will provide for high-quality financial services to Korean corporate operations there.

Euh has exhibited the managerial talent he honed while studying international finance, running Korea University, advising a number of leading companies and, most recently, chairing the presidential committee for national branding.

His footsteps in the financial sector started as a member of the Monetary Policy Committee of the Bank of Korea in 1992.

After his service at the BOK for three years, he assumed board member roles at the Korea Development Bank from 1996 to 1997, and at Korea First Bank between 1998 and 1999.

By Kim Yon-se (kys@heraldcorp.com)