KB Kookmin Bank plans to issue up to 500 billion won in hybrid capital securities, aims to boost BIS ratio [fn Market Watch]

[Financial News] KB Kookmin Bank is pursuing the issuance of up to 500 billion won in hybrid capital securities. The move is part of an effort to raise capital and boost its capital adequacy ratio under Bank for International Settlements (BIS) standards. It plans to initially issue 340 billion won, with the option to increase the amount depending on demand from institutional investors.
According to the Financial Supervisory Service's Data Analysis, Retrieval and Transfer System (DART) on the 29th, KB Kookmin Bank held a board meeting the previous day and decided to issue 340 billion won in write-down contingent capital securities. The board approved an issuance limit of 500 billion won. The actual issuance amount will be determined based on the results of bookbuilding.
The proceeds will be used for working capital, and the issuance is aimed at raising the BIS total capital ratio.
Hybrid capital securities are capital instruments that may qualify as a bank's Additional Tier 1 (AT1) capital. Unlike ordinary senior bank bonds, they have effectively perpetual maturities and loss-absorbing features, so banks use them to manage capital adequacy.
KB Kookmin Bank attached a call option to these securities, allowing it to redeem them early beginning five years after issuance. In particular, if KB Kookmin Bank is designated as a distressed financial institution under applicable laws, the entire principal and interest will be permanently written off. The structure means investors bear a greater risk of loss absorption than with ordinary bank bonds.
The issuance rate will be determined after bookbuilding with institutional investors. Specific issuance terms, including the subscription date, payment date and lead manager, have not yet been finalized.
Through this issuance, KB Kookmin Bank is expected to bolster its Additional Tier 1 capital and secure capital capacity to respond to increases in risk-weighted assets and other factors.

[email protected] Kim Hyun-jung Reporter