UPDATE 2-Kookmin could delay holding co launch, shares slump

(Adds analyst comment)

By Kim Yeon-hee

SEOUL, July 16 (Reuters) - South Korea's Kookmin Bank 060000.KS said it would not proceed with the launch of a holding company if many shareholders voted against it, clouding prospects for its plan to create more shareholder value and sending its stock tumbling more than 10 percent.

Shares of Kookmin 060000.KS, the country's fifth-largest stock, plunged to a nearly 4-month low after the announcement.

Kookmin had expected a holding company structure to boost non-banking operations such as brokerage, insurance and consumer finance, to make up for weaker lending margins, while analysts said the plan would better utilise Kookmin's excess capital.

But investors have turned cautious about whether the country's top retail lender would proceed with transformation as global equity markets extended their recent slump.

Kookmin had initially offered to buy back shares at a set price from any shareholders opposed to the plan, but its shares have since fallen well below that level.

The share price downturn on the back of credit woes in the global financial sector and high inflation has increased chances of shareholders voting against the holding firm launch in the hope that Kookmin (KB.N) will offer them a higher price.

However, that may require Kookmin to shell out far more capital than originally expected and eventually force it to abandon the plan.

Kookmin Bank's board had to decided to delay the holding company launch if shareholders holding more than 15 percent of its total issued shares opposed the plan, the company said in a statement on Wednesday.

The board took into consideration the bank's current share price and financial conditions, it added.

At the same time, the bank would seriously considering buying back shares from the market as one of the possible measures to successfully launch a holding firm, it said.

Sung Byung-soo, a banking analyst with Prudential Investment & Securities, said Kookmin would likely buy back shares from the market later this month or in early August in a bid to dissuade shareholders from opposing a share swap.

Each share of Kookmin was supposed to be swapped for one stock of the newly-launched firm on Sept. 29, after a shareholders' meeting in August.

For shareholders opposed to the swap, shares would be bought at 63,293 won ($62.99) apiece, 10 percent higher than Tuesday's closing price.

Kookmin shares fell 9.2 percent to 52,200 won by 0304 GMT, sharply underperforming the benchmark index which was down 0.8 percent. They briefly plunged to 52,100 won, the weakest since March 20, and a nearly 30 percent drop from their 2008 high of 72,600 won hit in early May.