SEOUL (Reuters) - State-owned Korea Development Bank (KDB) on Tuesday declined to comment on its talks with Lehman Brothers LEH.N over a possible investment but said it was aiming to be a top three investment bank in Asia within the next five years.
“I’d believe no comment would be the best strategy for us,” KDB Chief Executive Min Euoo-sung told reporters at a venture capital forum, when asked about the negotiations.
“It is inappropriate for me to say anything on the deal at this moment,” he said, adding that he hoped to make an announcement in the near future.
Last week KDB [KDB.UL] confirmed talks with the subprime-hit U.S. investment bank. A 25 percent stake in Lehman could cost KDB up to $5.3 billion, according to reports [nSP115462].
But on Monday, the chairman of South Korea’s top financial regulator, Jun Kwang-woo, called on KDB to carefully weigh its potential investment in Lehman. Dow Jones Newswires reported on Tuesday that Jun, chairman of the Financial Services Commission, had gone further, saying that talks between KDB and Lehman had ended.
A spokesperson for the regulator denied that report, saying Jun had never made any such declaration.
Lehman shares nevertheless were down 16 percent to $11.88 in morning trade after earlier touching a nearly 10-year low of $11.83.
Min, who led Lehman’s South Korean operations from 2005 until early June, reiterated that the global market turmoil would put more companies up for grabs and provide good timing for the state-owned bank’s global expansion over the next couple of years.
KDB has been transforming itself from a state-owned bank to a private investment bank, which the government hopes will help turn the country’s financial sector into an economic growth engine.
“Along with our privatisation, we will actively make inroads into the overseas markets to take off as a global CIB (corporate and investment bank),” Min said in a speech delivered for the forum.
“By successfully implementing the globalisation strategy, we aim to build one of the top three global networks in Asia within the next five years to eventually evolve into a global CIB.”
Min, who had structured leveraged buyouts during his stint at Citibank in New York, said the ambitious goal did not take into consideration “the current discussion” on the possible Lehman investment and would apply to all product areas.
According to Thomson Reuters data, China’s CITIC (600030.SS), Mitsubishi UFJ Financial Group and Daiwa Securities (8601.T) are the only Asian players ranked in the top three for Asian equity capital or debt capital markets.
Like many South Korean financial services firms, KDB plans to enter China and Southeast Asia and will also expand its presence in the Americas and Europe, the CEO said in the speech.
South Korea plans to privatise KDB by establishing a holding company by the end of this year and selling it off by 2012 as part of a drive to restructure the country’s state-run institutions.
Reporting by Kim Yeon-hee; Editing by Jonathan Hopfner and John Wallace