The Financial Services Commission on Wednesday approved KB Financial Group’s acquisition of LIG Insurance, six months after the group embarked on plans to beef up its nonbanking business segments.
By taking over the insurer, KB is expected to regain its status as the country’s leading financial group with assets worth 423 trillion won ($383 billion). Currently, it has some 399.3 trillion won. Shinhan Financial Group will be pushed down to second place with 401 trillion won.
The regulator, however, demanded continued efforts from KB to rebuild the company that suffered a leadership vacuum and a fallout with consumers over a massive data leak.
“The group must exercise strict control to prevent internal issues from turning into a management crisis at KB,” FSC chairman Shin Je-yoon said Wednesday. “Such efforts will provide momentum for other financial groups to closely monitor their internal control and corporate structures as well.”
KB, which will also operate the U.S. branch of LIG Insurance, is waiting to receive approval from the Federal Reserve Board to become a financial holding company in the U.S.
The financial group had been opting for mergers and acquisitions to diversify its business portfolio amid growing uncertainties in the banking sector.
In June, KB Financial bought a 19.47 percent stake in LIG Insurance for 685 billion won.
Two months later, the group asked for the FSC’s approval for the takeover, but the financial authorities delayed the decision, citing concerns over its management structure.
The process was further delayed when KB became mired in a lengthy internal dispute between its former group chairman and Kookmin Bank president over a costly replacement of its computing system.
The incident led to the resignation of both chiefs and ignited a heated debate on the soundness of South Korea’s financial group system.
Against this backdrop, KB Financial Group chairman and Kookmin Bank president Yoon Jong-kyoo confirmed that the outside directors of the group and bank will step down in March to take responsibility for the previous management crisis.
