Seoul plans Kookmin Bank sale
SEOUL, South Korea (Reuters) -- South Korea plans to auction its entire 9.1 percent stake in Kookmin Bank by mid-December, in an attempt to fully privatize the country's biggest lender, the finance ministry says.
But bank stocks have lost steam recently and tumbled further on Wednesday due to renewed concerns over the solvency of credit card firms.
That means demand for the stake could weaken if Kookmin shares perform poorly in the next two weeks, analysts said Wednesday.
The government has long planned to sell its stake in Kookmin by the end of the year to raise 1.6 trillion won ($1.36 billion), and has considered various options, including issuing convertible bonds and selling some shares back directly to Kookmin.
Under the current price, the 9.1 percent stake is worth 1.32 trillion won ($1.1 billion).
Only those already owning a bank or other financial service business -- including Kookmin Bank itself -- could participate in the auction.
Kookmin said it also planned to join the auction to buy back shares, but has not decided how much of shares it would bid for.
Shares in Kookmin Bank sank 7.89 percent to 42,600 won and the banking index lost 5.91 percent, against the broader market's 3.78 percent fall, on fears over liquidity problems in the credit card sector.
This came after LG Group asked banks to lend two trillion won ($1.7 billion) to cash-strapped affiliate LG Card Co.
"Since the stake is not enough to promise control over the bank's management, demand is purely up to the bank stocks' outlook, where pros and cons are going on," said Jang Seung-hoon, an analyst at SK Securities.
The banking sector has gained 33 percent since the end of April, but has fallend for four days in row as of Wednesday, losing around seven percent.
"The sale is good as this will complete privatisation," said Kim Jin-sang, an analyst at HSBC Investment Bank.
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