Foreign shareholders oppose bank mergers

Foreign shareholders are voicing disapproval to government-led bank merger plans. The government is pressuring banks to unveil specific merger plans by next week but foreign shareholders are showing a lukewarm response to the idea, casting doubts over the success of the government¡¯s second-phase financial restructuring plan.

Some foreign shareholders have openly denounced the government for leaking its merger plans to the press without holding consultations with the parties concerned.

Pressured by the government, Hana and KorAm Banks announced plans to merge within the year, but according to sources in financial circles Wednesday, it remains uncertain whether the merger will go ahead as planned. The sources pointed to the reluctance of the Carlyle Group of the United States, a large shareholder of KorAm Bank, to proceed with the plan. Carlyle Asia said that any merger should be conducted with the aim of bettering the interests of shareholders, not due to government pressure. It said the group would conduct surveys of several banks, including Hana Bank, before announcing its position on a merger plan.

The government also is considering putting Korea Exchange Bank (KEB) under the control of a financial holding company led by Hanvit Bank, but Commerzbank of Germany, a large shareholder in the bank, has yet to green light the plan.

Goldman Sachs, a large shareholder of Kookmin Bank, already made clear its opposition to plans either to merge Kookmin with KEB or acquire a regional bank, saying this would only result in a reduced share price.

ING and Allianz, large shareholders of Hana Bank and Housing & Commercial Bank, also refused to accept what they view as merger plans that run counter to the interests of shareholders.

An official of a commercial bank said that he understands the government is taking great pains to complete restructuring in the banking sector as quickly as possible. But he said leaking its own ideas for bank mergers without obtaining the consent of the foreign shareholders involved would only hamper successful bank mergers and undermine the credibility of government policies.