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Bukopin eyes South Korean customers after KB Kookmin Bank’s takeover
KB Kookmin Bank is officially named Bank Bukopin’s controlling shareholder after it injected US$780 million through two corporate actions.
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ublicly listed Bank Bukopin is eyeing to lure South Korean customers in an effort to improve its liquidity and regain customers’ trust following a takeover by KB Kookmin Bank.
The privately owned bank plans to use the funds from the Korean customers to pay for the pending transaction and help to improve its reputability.
“We’ve received about Rp 1.6 trillion [US$113.97 million] in savings from our Korean customers in the past two months and there are still Rp 2 trillion in the pipeline by the end of this year,” Bank Bukopin chief strategic officer Jikyu Jang said during an online press briefing on Monday.
He cited the bank’s new Korean-link business group, established after South Korea’s KB Kookmin Bank was named as the bank’s controlling shareholder, as the reason why it managed to attract so much funds to the bank.
KB Kookmin Bank was officially named Bank Bukopin’s controlling shareholder after it injected US$780 million through two corporate actions, a rights issue in August and a private placement in September. Those actions increased the South Korean bank’s stake from 22 percent to 67 percent.
KB Kookmin Bank is part of South Korea’s biggest financial group, KB Financial Group, which has about $500 billion in assets.
Bank Bukopin president director Rivan Purwantono added that the bank would focus on attracting more Korean customers, especially Korean companies, to help the bank realize its plan to rely more on low-cost funding.
The bank eyes around 2,000 companies and 30,000 South Korean nationals in Indonesia that could potentially be its customers.
South Korea’s investment in Indonesia had grown 5.3 percent year-on-year (yoy) to $1.1 million as of September 2020 despite the pandemic, according to the Investment Coordinating Board (BKPM).
“KB Kookmin Bank’s extensive network will help us to achieve this target,” said Rivan.
The move is also part of the bank’s new strategy of diversifying its portfolio to become the main player in international trade transactions for South Koreans as well as in the retail and micro, small and medium enterprises (MSMEs) segments.
He also said that Korean customers’ willingness to put their funds in the bank showed that KB Kookmin’s takeover was able to restore customers’ trust in Bank Bukopin.
Bank Bukopin’s customers were losing confidence in the bank as it faced liquidity issues in June, causing it to limit daily withdrawals and require customers seeking to make withdrawals of more than Rp 10 million to inform the bank days prior.
The fund injection from KB Kookmin Bank managed to help increase Bank Bukopin's cash almost threefold. It also increased the bank’s equity by 17.27 percent to Rp 10.36 trillion and strengthened its capital adequacy ratio (CAR) to 16.34 percent as of September from 12.59 percent recorded in December 2019.
In the meantime, Rivan said Bank Bukopin would also work on its internal transformation process and improve its human capital following KB Kookmin Bank’s takeover.
It would also implement a new credit process and increase the role of its risk management division to make its business more prudent.
“We would create a new division that would focus on managing risky assets and foreclosed loans,” he said.
As part of its transformation, Bank Bukopin plans to rebrand itself by making changes to its name, said Rivan. The bank will seek shareholders’ approval for the plan in the extraordinary general shareholders meeting on Dec. 22.
Given the current COVID-19 pandemic, the bank would focus on its transformation plan and hold off any expansion plan, chief financial officer Senghyup Sin said during the briefing.
He also added that the bank was focused on strengthening its business by increasing its loan loss provision allocation to Rp 3.2 trillion as of September, or up 157 percent from December 2019.
“We’ve also restructured Rp 24.5 trillion in loans as of September, around 73 percent of it, or Rp 18 trillion, are those impacted by the pandemic,” he said.
Bank Bukopin’s shares, listed under the code BBKP at the Indonesia Stock Exchange (IDX), have gained 59.86 percent since the beginning of the year. Its share price slipped 0.59 percent to Rp 338 on Thursday morning.
