KB Financial Group Inc. is looking to grow its alternative investments business in Hong Kong as part of plans to boost noninterest income, Lee Dong-cheol, deputy president and chief strategy officer at the South Korean financial group, told S&P Global Market Intelligence.
KB Securities Co. Ltd., the No. 3 brokerage in South Korea by equity size as of 2016-end, was formed following KB Financial's acquisition of Hyundai Securities Co. Ltd. and merging it with KB Investment & Securities Co. Ltd. in late 2016. The brokerage is now looking to widen the scope of its investment banking operations and diversify its sources of income.
It currently is heavily dependent on interest income generated by KB Kookmin Bank, which accounted for about 70% of the group's operating income in 2016. The formation of KB Securities was part of the move to grow fee income, especially with respect to alternative investment assets, including real estate, private equity and commodities, Lee said April 4.
To this end, the Hong Kong subsidiary of KB Securities will act as a scout for deals and alternative investments in the region in collaboration with other group affiliates, Lee said. For instance, he explained, KB Securities could form a fund with real estate assets cultivated by the Hong Kong subsidiary, which could then be sold to customers via bank branches across South Korea.
KB Securities plans to hire alternative investment experts in Hong Kong and is considering raising the capital level of the subsidiary, Lee said. The brokerage's Hong Kong unit will move its office to be next to KB Kookmin Bank's local branch to facilitate cooperation internally, he added.