South Korea's Kookmin Bank to Seize Control of Bukopin

Jakarta. South Korean lender KB Kookmin Bank is set to take over as the controlling shareholder of Bank Bukopin, a local medium-sized bank, giving investors hope both lenders may soon be on the path to faster growth.

Bukopin's shares rose as high as 15 percent to Rp 142 (1 US cent) per share as the Indonesia Stock Exchange opened on Monday, following the Financial Services Authority's (OJK) announcement that it was processing Kookmin's proposal to buy a majority stake in the local lender. 

"The OJK received information from Bank Bukopin that it had reached an agreement with a prospective investor, KB Kookmin Bank, to become its controlling shareholder," Anto Prabowo, OJK's deputy commissioner for public relations and logistics, said in a statement on Monday.

Anto said the OJK supported the plan and would process the proposal according to the rules and regulations. 

Kookmin currently has a 22 percent stake in Bukopin. The OJK said the South Korean lender had made a commitment to increase Bukopin's capital through a rights issue by the end of June. 

Jong-Hwan Han, Bukopin's risk management director, said Kookmin has a strong desire to support Bukopin's effort to strengthen capital and help its business development go forward.

Bukopin President Director Eko Gindo said the rights issue had already entered its final document review. 

He said Bukopin would target micro, small and medium enterprises (MSMEs) and the consumer segment and focus on developing its digital banking.

The OJK put Bukopin under monitoring in 2017 after the lender's bad loans exceeded the 5 percent of total loans cap set by the authority.

In 2018, the lender's internal audit found Bukopin had misstated the 2016 revenue from its credit card business, showing its net income that year at Rp 1 trillion instead of the actual Rp 184 billion.

The lender managed to reduce its bad loan rate to 4.45 percent by the end of last year.

Bukopin booked a net income of Rp 217 billion last year, up 14 percent from 2018 as its loan disbursement grew 4.7 percent to Rp 69.5 trillion.