KB Kookmin Bank provides commercial banking products and services in Korea. The company’s subsidiaries collectively engage in a range of businesses, including commercial banking, credit cards, asset management, life insurance, capital markets activities and international banking. The company operates as a subsidiary of KB Financial Group Inc.
As of December 31, 2010, the company had a customer base of approximately 26 million retail customers. It provides a range of personal lending products an...
KB Kookmin Bank provides commercial banking products and services in Korea. The company’s subsidiaries collectively engage in a range of businesses, including commercial banking, credit cards, asset management, life insurance, capital markets activities and international banking. The company operates as a subsidiary of KB Financial Group Inc.
As of December 31, 2010, the company had a customer base of approximately 26 million retail customers. It provides a range of personal lending products and retail banking services to individual customers, including mortgage loans.
Retail Banking
The company’s retail banking activities consist primarily of lending and deposit-taking.
Lending Activities
The company offers various loan products that target different segments of the population, with features modified to each segment’s financial profile and other characteristics. The company’s retail loans consist of:
Mortgage loans, which are loans made to customers to finance home purchases, construction, improvements or rentals; and home equity loans, which are loans made to its customers secured by their homes to ensure loan repayment. The company also provides overdraft loans in connection with its home equity loans.
Other consumer loans, which are loans made to customers for any purpose (other than mortgage and home equity loans). These include overdraft loans, which are loans extended to customers to cover insufficient funds when they withdraw funds from their demand deposit accounts with the company in excess of the amount in such accounts up to a limit established by the company.
For secured loans, including mortgage and home equity loans, its policy is to lend up to 100% of the adjusted collateral value minus the value of any lien or other security interests that are prior to its security interest.
Mortgage and Home Equity Lending
The company provides customers with a number of mortgage and home equity loan products that have flexible features, including terms, repayment schedules, amounts and eligibility for loans, and the company offers interest rates on a commercial basis. The maximum term of mortgage loans is 35 years and the majority of its mortgage loans have long-term maturities, which may be renewed.
Other Consumer Loans
Other consumer loans are primarily unsecured. However, such loans may be secured by real estate, deposits or securities. Overdraft loans are also classified as other consumer loans, are primarily unsecured and generally have an initial maturity of one year, which is typically extended automatically on an annual basis and may be extended up to a maximum of five years.
Deposit-taking Activities
The company offers deposit products that target different segments of its retail customer base, with features modified to each segment’s financial profile, characteristics and needs, including: Demand deposits, Time deposits, Savings deposits, Certificates of deposit, and Foreign currency deposits.
The company also offers deposits that provide the holder with preferential rights to housing subscriptions and eligibility for mortgage loans. These products include:
Housing subscription time deposits, which are special purpose time deposit accounts providing the holder with a preferential right to subscribe for new private apartment units under the Housing Law. These products accrue interest at a fixed rate for one year, and at an adjustable rate after one year. These deposit products target high and middle income households.
Housing subscription installment savings deposits, which are monthly installment savings programs providing the holder with a preferential subscription right for new private apartment units under the Housing Law. Account holders are also eligible for its mortgage loans. These deposit products target low- and middle-income households. As of December 31, 2010, the company had approximately four million KB Star Club customers.
Credit Cards
Credit cards are another of the company’s core retail products. Its credit card business is operated by a newly established wholly-owned subsidiary, KB Kookmin Card Co., Ltd. As of December 31, 2010, the company had approximately 10.5 million cardholders. Under non-exclusive license agreements with MasterCard International Incorporated and Visa International Service Association, the company also issues MasterCard and Visa credit cards.
Corporate Banking
The company lends to and takes deposits from small- and medium-sized enterprises and, to a lesser extent, large corporate customers. As of December 31, 2010, the company had 227,860 small- and medium-sized enterprise borrowers and 993 large corporate borrowers for Won-currency loans.
The company offers cash management services to corporate customers, which include ‘firm-banking’ services, such as inter-account transfers, transfers of funds from various branches and agencies of a company (such as insurance premium payments) to the account of the headquarters of such company and transfers of funds from various customers of a company to the main account of such company. Of its branch network, as of December 31, 2010, the company had eight branches that primarily handled large corporate banking.
On the deposit-taking side, the company offers its corporate customers several types of corporate deposits. The company’s corporate deposit products can be divided into two general categories: demand deposits that have no restrictions on deposits or withdrawals, but which offer a relatively low interest rate; and deposits from which withdrawals are restricted for a period of time, but offer higher interest rates. The company also offers installment savings deposits, certificates of deposit, and repurchase instruments.
Small- and Medium-sized Enterprise Banking
Lending Activities
The company’s principal loan products for its small- and medium-sized enterprise customers are working capital loans and facilities loans. Working capital loans are provided to finance working capital requirements and include notes discounted and trade financing. Facilities loans are provided to finance the purchase of equipment and the establishment of manufacturing assembly plants. The company also offers collective housing loans. Its collective housing loans are mortgage loans to home builders or developers who build or sell single- or multi-family housing units, principally apartment buildings. These builders and developers are categorized as small- and medium-sized enterprises. The company offers various collective housing loans, including loans to purchase property or finance the construction of housing units, loans to contractors used for working capital purposes, and loans to educational establishments, small- and medium-sized enterprises and non-profit entities to finance the construction of dormitories.
Large Corporate Banking
Large corporate customers include all companies that are not small- and medium-sized enterprise customers.
Lending Activities
The company’s principal loan products for its large corporate customers are working capital loans and facilities loans. The company also offers collective housing loans to large corporate clients.
Capital Markets Activities and International Banking
Through its capital markets operations, the company invests and trade in debt and equity securities and, to a lesser extent, engage in derivatives and asset securitization transactions and make call loans. The company also provides investment banking services to corporate customers.
Securities Investment and Trading
The company invests in and trade securities for its own account in order to maintain adequate sources of liquidity and to generate interest and dividend income and capital gains. The company’s trading and investment portfolios consist primarily of Korean treasury securities and debt securities issued by Korean government agencies, local governments or certain government-invested enterprises and debt securities issued by financial institutions.
From time to time the company also purchases equity securities for its securities portfolios. The company’s equity securities consist primarily of marketable beneficiary certificates and equities listed on the KRX KOSPI Market or the KRX KOSDAQ Market.
The company’s trading portfolio also includes foreign exchange spot contracts and derivative instruments. The company’s investment portfolio also includes venture capital securities, non-marketable or restricted equity securities and investments under the equity method.
Derivatives Trading
The company provides and trades a range of derivatives products, including: Won interest rate swaps, relating to Won interest rate risks; cross-currency swaps, relating to foreign exchange risks, largely for Won against U.S. dollars; foreign exchange forwards, swaps and options, relating to foreign exchange risks; and equity options on the KOSPI index.
The company’s derivatives operations focus on addressing the needs of its corporate clients to hedge their risk exposure and to hedge its risk exposure that results from such client contracts. The company also engages in derivatives trading activities to hedge the interest rate and foreign currency risk exposures that arise from its own assets and liabilities. A substantial portion of these hedge-purposed derivatives contracts, however, do not qualify for hedge accounting under U.S. GAAP and are consequently treated as trading derivatives. In addition, the company engages in proprietary trading of derivatives within its regulated open position limits.
Asset Securitization Transactions
The company is active in the Korean asset-backed securities market. Based on its diverse experience with respect to product development and management capabilities relating to asset securitization, the company offers customers a range of financial products and participate in various asset securitization transactions, including through its subsidiary KB Investment & Securities, to reinforce its position as a financial services provider with respect to the asset securitization market.
Call Loans
The company makes call loans and borrows call money in the short-term money market. Call loans are defined as short-term lending among banks and financial institutions either in Won or in foreign currencies with maturities of 90 days or less. Call loans have maturities of one day.
Investment Banking
The main focus of the company’s investment banking operations is project finance and financial advisory services. The company’s principal investment banking services include: project finance and financial advisory services for social overhead capital projects such as highway, port, power, water and sewage projects; financing and financial advisory services for real estate development projects; structured finance; and financing for mergers and acquisitions.
International Banking
The company engages in various international banking activities, including foreign exchange services and derivatives dealing, import and export-related services, offshore lending, syndicated loans and foreign currency securities investment. These services are provided primarily to its domestic customers and overseas subsidiaries and affiliates of Korean corporations. The company also raises foreign currency funds through its international banking operations.
The company’s overseas branches and subsidiaries principally provide Korean companies and nationals in overseas markets with trade financing, local currency funding and foreign exchange services, in conjunction with the operations of its headquarters.
Trustee and Custodian Services Relating to Investment Trusts and Other Functions
The company acts as a trustee for 59 financial investment companies with a collective investment license, which invest in investment assets using funds raised by the sale of beneficiary certificates of investment trusts to investors. The company also acts as custodian for 138 financial institutions and as fund administrator for 57 financial institutions with respect to various investments, as well as acting as settlement agent in connection with such services. The company performs the following functions: holding assets for the benefit of the investment trusts or institutional investors; receiving and making payments in respect of such investments; acting as settlement agent in respect of such investments on behalf of the investment trust or institutional investors, in the domestic and overseas markets; providing reports on assets held in custody; providing certain foreign exchange services for overseas investment and foreign investors; and providing fund-related administration and accounting services.
Other Businesses
Trust Account Management Services
Money Trust Management Services
The company provides trust account management services for unspecified money trusts. It provides trust account management services for 20 types of money trusts. The money trusts the company manages are trusts with a fixed maturity. Specified money trust accounts are established on behalf of individual customers who direct its investment of trust assets.
Property Trust Management Services
The company also offers property trust management services, where the company manages non-cash assets in return for a fee. Non-cash assets include mostly securities, but can also include other liquid receivables and real estate.
Investment Trust Management
Through KB Asset Management, the company offers investment trust products to customers and manages the funds invested by them in investment trusts.
Banking Branch Network
As of December 31, 2010, the company operated a network of 1,173 branches and sub-branches in Korea. Of its branch network as of December 31, 2010, the company had eight branches that primarily handled large corporate banking. In order to support its branch network, the company has established a network of ATMs, which are located in branches and in unmanned outlets known as ‘autobanks.’ As of December 31, 2010, the company had 9,338 ATMs.
History
KB Kookmin Bank was founded in 1963. The company was incorporated in 1963.
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