S&P: Korea Exchange Bank still on watch

Standard & Poor's said its BBB/A-2 counterparty credit ratings on Korea Exchange Bank (KEB) and its BBB- rating on the bank's lower tier II subordinated notes remain on CreditWatch with positive implications.

The agency noted that this follows media reports on May 19 that Kookmin Bank (A-/stable/A-2) agreed to purchase about 65% of KEB from Lone Star Funds for W15,200 per share.

The CreditWatch placement on March 23 reflected expectations that the higher rated Kookmin will provide strong support to KEB after the acquisition and that the market position of the combined bank should improve, S&P said.

S&P added that the ratings on KEB, along with the rating on its subordinated bonds, could be raised by one or two notches, depending on the funding structure Kookmin adopts, its negotiations with labor groups and its post-acquisition consolidation strategy.

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