KB's Indonesian subsidiary to launch $551 mn rights issue

The Southeast Asian subsidiary has suffered a $279 mn loss over the past 5 years; it aims to lower the nonperforming loan ratio to 3%

Bank KB Bukopin's headquarters in Jakarta, Indonesia (Courtesy of KB Bukopin) 
Bank KB Bukopin's headquarters in Jakarta, Indonesia (Courtesy of KB Bukopin) 
Bo-Hyung Kim 1
2022-10-12 12:00:46 kph21c@hankyung.com
Rights offerings

Bank KB Bukopin, South Korean bank KB Bank's Indonesian subsidiary, is set to raise capital by issuing 8.44 trillion rupiah ($550.6 million) in new shares.

KB Bank decided on the Indonesian subsidiary's rights offering during a board meeting on Oct. 11.

KB Bukopin’s cumulative losses over the past five years amount to 400 billion won ($278.8 million).

Bank KB Bukopin's net loss
Unit: billion won

Source: KB Bank

Graphics by Jerry Lee



The Indonesian subsidiary ranks 19th among Indonesia’s 115 private banks in terms of assets. KB Bank became the second-largest shareholder of the Indonesian bank by acquiring a 22% stake in 2018 in a move to enter the southern region of Asia including ASEAN.

After two years, the Korean bank became the largest shareholder with a 67% stake via two rights offerings.

However, KB Bukopin has been suffering losses due to worsening financial distress in the retail banking sector as Indonesia’s travel industry slowed during COVID-19.

KB Bank also participated in KB Bukopin’s third rights offering of 560 billion won in November 2021. The Korean parent has injected a total of 810 billion won into the Indonesian subsidiary via KB Bukopin's rights offerings so far.

KB Bukopin is aiming to lower its nonperforming loan (NPL) ratio to 3% in a bid to improve financial conditions, followed by repaying 5 trillion rupiah in NPLs in the first half of this year.

Indonesia’s Financial Services Authority, or OJK, has recently raised KB Bukopin’s risk-based bank rating (RBBR) from the third rank to second. It is expected to boost KB Bukopin’s sales as the higher rank allows the launch of more financial products such as digital banking services.

Write to Bo-Hyung Kim at kph21c@hankyung.com
Jihyun Kim edited this article.
#KB Bank Korea #KB Bukopin Indonesia #Korean-Indonesian bank #Bank rights offering #new stock issuance #Korea financial group

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