UPDATE 1-Kookmin aims to sell stake in itself by year-end

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SEOUL, Sept 9 (Reuters) - The head of Kookmin Bank's 060000.KS soon-to-be-launched holding company said on Tuesday it was in talks with foreign institutions to sell its own shares, and is aiming to conclude the process by year-end.

Kookmin (KB.N), South Korea's top retail lender, has secured enough shareholder support to convert into a holding company structure on Sept. 29. Under domestic law, Kookmin has to dispose of the shares it owns in itself within the next three years.

With the adoption of the new business structure, Kookmin is aiming to boost non-banking operations such as brokerage, insurance and consumer finance, joining local rivals Shinhan Financial Group (055550.KS), Woori Finance Holdings (053000.KS) and Hana Financial Group (086790.KS).

The Government of Singapore Investment Corp (GIC) and Japan's Sumitomo Mitsui (8316.T) have each been tipped to acquire a 3-4 percent stake in Kookmin's holding company.

Kookmin's holding firm will own a 20 percent stake in itself after buybacks, worth about $4 billion, based on the banking arm's current market price.

Hwang Young-key, chief executive of the future entity, said the company was in talks with foreign institutions to sell shares owned by itself, and that it would strive to maintain a similar ratio of foreign and domestic investors.

"Should the stake sale fail to be concluded by year-end," Hwang said, "we are planning to launch exchangeable bonds."

Hwang, who had chaired Woori Finance between 2004 and early 2007, said Kookmin had no interest in an overseas acquisition, but was aiming to merge with a "top-tier domestic financial company."

His comment stood in sharp contrast to Korea Development Bank's (KDB) ongoing pursuit of struggling U.S. bank Lehman Brothers LEH.N as the state-run South Korean firm drives to become a global player.

While Hwang did not elaborate on the identity of the domestic financial institution, he said Kookmin was planning to initiate the merger during the first half of 2009.

"We are looking at several options but are not yet in discussions with a specific partner," Hwang said.

Hwang also said Kookmin would be aiming to raise its total assets from its current 200 trillion won ($182.3 billion) to 300 to 500 trillion won through the merger.

(Reporting by Lee Eun-yul, Writing by Marie-France Han, Editing by Keiron Henderson)