Seoul-based KB Kookmin Bank has steered clear of litigation in controlling Indonesian subsidiary Bank Bukopin, as its minority shareholder in Indonesia dropped all charges against South Korea‘s largest commercial bank, a filing showed Tuesday.

Bosowa Corporindo, which was holding a 11.6 percent stake in the Indonesian midsized bank, has reached an out-of-court settlement for the 20.8 trillion-Indonesian-rupiah ($1.5 billion) charges against the bank‘s new controlling shareholder and Indonesian financial watchdog Otoritas Jasa Keuangan, according to a disclosure submitted to Korea’s Financial Supervisory Service.

The Indonesian conglomerate also pledged not to sue with regard to the matter and to prioritize Bank Bukopin‘s normalization process by maintaining close cooperation with KB Kookmin Bank.

KB Financial Group, a parent company of KB Kookmin Bank, noted in a disclosure that Bosowa had dropped its lawsuit on May 31, which it had earlier filed to the Central Jakarta District Court.

The news comes months after KB Kookmin Bank became the largest shareholder of Bank Bukopin with 67 percent of voting rights as of September, as planned in July 2019. The transaction was made through Bank Bukpoin’s rights offering to shareholders and an additional 3.1 trillion-rupiah private placement of new shares exclusively to the Korean shareholder.

This, as a result, has deprived Bosowa of its control over Bank Bukopin, which was previously the lender‘s largest shareholder. Before the deal, KB Kookmin was the second-largest shareholder with 22 percent ownership.

Bosowa filed a lawsuit against local authorities for stripping it of its right to vote and KB Kookmin for violating Indonesia’s rule. KB Kookmin has claimed that Bosowa‘s argument was groundless.

In light of Bosowa’s recent decision to drop the charge, KB Kookmin is expected to continue its foray into retail operations of Southeast Asian regions.

Bank Bukopin is the second financial arm in Southeast Asia to be under the umbrella of KB Kookmin, after Cambodia‘s Prasac Microfinance Institution. KB Kookmin acquired a 70 percent stake of Prasac in April 2020.

By Son Ji-hyoung (consnow@heraldcorp.com)