KB Financial Group is scheduled to submit the application to financial authorities this week to take over the country’s fourth-largest nonlife insurer, according to market watchers. The banking group promised to apply within 45 days of signing a deal with LIG Insurance on June 27. The deadline is Aug. 11.
|KB Financial Group chairman Lim Young-rok (Bloomberg)|
It is not certain, however, whether financial regulators will approve the application. In order to receive approval, KB Financial Group should have higher than the second level in a business assessment. The company reached the level in 2013 but this could drop because its top executive may face severe punishment from financial regulators. He neglected to carry out a business plan the company made in the process of the KB Card spin-off, according to the financial watchdog.
Last week, the Board of Audit and Inspection released the results of an audit on KB Card’s spin-off from KB Kookmin Bank in March 2011. The card company had not deleted customer information even though it stated it would in its business plan. Regulators said that negligence led to a massive information leak incident at the banking group last year.
The financial watchdog said this could lead to the severe punishment of group chairman Lim Young-rok as he did not properly examine the implementation of the plan. Lim supervised the spin-off of the bank’s credit card unit in 2011, and he also served as chief executive of KB Financial Group during a massive information leakage in June 2013.
“If the negligence is proven, this can also lower the credibility of whether the company will properly implement its business plan on the acquisition of LIG Insurance,” said an official at the financial regulator, who declined to be identified.
Regarding the audit result, KB Financial Group’s official said, “The information that we agreed to delete in the business plan was not customer information but pure bank information such as loans, which a card company does not need.”
“We have completely implemented the business plan though there may be differences in understanding of some issues,” he said.
If KB Financial Group receives approval from financial authorities as scheduled, it will officially launch KB Insurance on Oct. 1. Then, KB Financial Group will become the No. 1 financial group in South Korea with total assets of 319 trillion won ($307 billion), surpassing Shinhan Financial Group’s 318 trillion won.
By Shin Ji-hye (firstname.lastname@example.org)