S.Korea to split KDB into holding firm, state fund

SEOUL, June 2 (Reuters) - South Korea plans to split state-run Korea Development Bank (KDB) by December into a holding company that would become a fully private investment bank by 2012 and a separate state fund, the financial watchdog said Monday.

The government is seeking to reshuffle and privatise KDB in a wave of deregulation in the financial sector.

The privatisation roadmap unveiled on Monday, subject to parliamentary approval, calls for a split of KDB between its commercial business and state financing business, the Financial Services Commission (FSC) said in a statement.

The commercial business -- KDB, affiliate Daewoo Securities (006800.KS) and KDB's asset management and loan service units, will be grouped under the KDB holding firm. The state financing portion will be set up as an separate entity, Korea Development Fund (KDF), and remain 100 percent-owned by the government.

The government will seek to sell 49 percent of the KDB holding company by the end of 2010 through private sales and an initial public offering slated for 2009. The remaining 51 percent stake would be sold by 2012, the FSC said.

The plan is aimed at helping grow KDB and its brokerage affiliate Daewoo into a globally competitive investment bank as well as encouraging more consolidation in the financial sector, according to the FSC. (Reporting by Rhee So-eui; Editing by Keiron Henderson)