Kookmin Bank, H&CB merge, to set up preparatory committee soon

Kookmin Bank and Housing & Commercial Bank (H&CB) announced Friday a merger that would create the nation's biggest bank, with 167 trillion won (about U$139 billion) in assets. The new bank will be ranked 60th in the world.

The merger announcement came while the two banks' labor unions were continuing a strike against the merger plan.

Kookmin Bank president Kim Sang-Hoon and H&CB chairman & president Kim Jung-Tae said in a press conference at the Bank of Korea that they signed a merger agreement at about 5 p.m.

The two banks decided to form a committee to promote the merger and conduct concrete negotiations on related matters, such as the merger ratio and the name of the new bank.

Kim Sang-Hoon of Kookmin said that the two banks would be merged with the aim of strengthening competitiveness and that a new bank would first be created to absorb the two. The formula may be changed if the two banks agree to do so, he said.

"We reached the conclusion that even healthy banks cannot maintain their status as leading banks if they are resting on their laurels at a time when foreign banks are increasingly encroaching on the domestic financial market," he said. "We think that the merger of our two banks is the best choice at the present."

He also said that the new bank to be born through the merger would have total assets of 167 trillion, with its own capital amounting to 6.25 trillion won. He said the new ultra-sized bank would be unrivaled by any other local bank in terms of profitability.