Indonesia moves to buy back KB Kookmin Bank's KB Bank assets

The Indonesian government has officially unveiled a plan to reacquire the assets of KB Bank (formerly Bank Bukopin), the local subsidiary of KB Kookmin Bank, through a consortium of cooperatives. The move is a strategic effort to restore the identity of a bank once owned by Indonesian cooperatives and to expand the influence of cooperatives in the national economy.

Speaking at the Forum Ekonomi Politik in Jakarta on Nov. 9, Indonesian Cooperatives Minister Ferry Yuliantono announced a plan to purchase the assets of KB Bank, which is owned by Korea's KB Financial Group. To that end, the government is forming a cooperative consortium that will buy the assets and re-enter bank management.

The push for reacquisition is rooted in the unique founding history of Bank Bukopin, KB Bank's predecessor. Bank Bukopin began as the Indonesian General Cooperative Bank, established in 1970 by Indonesian cooperative federations. It converted to a limited liability company in 1993, and in 2021 KB Kookmin Bank acquired a 67% stake to become the largest shareholder, rebranding it as KB Bank.

At the forum, Minister Yuliantono said, "Bank Bukopin was once owned by cooperative federations," adding, "We hope a cooperative consortium will purchase the assets and manage the bank again." The remarks publicly signaled a willingness to restore some control over the financial sector through domestic capital, particularly cooperatives.

However, he did not provide details on the asset purchase structure, the required capital, or the timeline for completion. In early October, the minister also expressed an intention to reclaim a stake in KB Bank, but he did not specify how much of KB Kookmin Bank's holding would be bought or how the funding would be raised.

A large-scale capital raise would be essential for the Indonesian government to proceed with an actual acquisition. The willingness of KB Kookmin Bank, the current largest shareholder, to sell is a key factor, but no official negotiations have begun. When the plan was first mentioned last month, KB Bank said it was "conducting business in compliance with relevant laws and regulations and in accordance with soundness principles," taking a cautious stance.

The move aligns with the new Indonesian government's broader economic restructuring under President Prabowo Subianto. The Cooperatives Ministry is pushing to introduce a new law to replace the 1992 Cooperatives Act. The new regulation reportedly includes establishing an institution to protect funds entrusted to cooperatives, similar to deposit insurance for commercial banks.

Minister Yuliantono said the new regulation aims to shift the economic paradigm away from overly free market mechanisms. "We will return to an economic system consistent with Article 33 of the 1945 Constitution, so that cooperatives can once again become a major pillar of the national economy," he stressed.

※ This article is an AI translation of the Korean original published by Korea Credit News; it was checked by automated quality guards and published by the English edition desk.