Kookmin's strength rating cut

The Phnom Penh Post
http://www.phnompenhpost.com

Written by George McLeod
Thursday, 21 May 2009

SOUTH Korea's biggest lender, Kookmin Bank - which this month opened a Phnom Penh branch - Wednesday had its bank financial strength rating cut by Moody's Investors Service.

Moody's - a US-based credit risk agency - cut Kookmin's rating from C to C- due to "rising bad debts and weak financial position", said a report quoted on Bloomberg.

Moody's defines the rating as a measurement of "a bank's intrinsic financial strength relative to all other rated banks globally".

In response, Kookmin said its Covered Bond rating remains a strong A2. Covered bonds are a specific type of bond whose assets remain on the balance sheet of the borrower, meaning the investor has a priority claim on the bank's assets. They normally get higher ratings than the bank that issues them. Kookmin added that both Standard and Poor's and Fitch - financial ratings agencies - give the bank a rating of A and A+, respectively.

Kookmin's local country head said he is optimistic about the bank's finances.

"The overall position of [Kookmin Bank] remains strong," said Ki Sung Jang, president of Cambodian operations. "This assessment by Moody's will not affect our operations in Cambodia in any way. The global economic crisis is not getting more serious - the situation now is better than it was in the first quarter.

"Our plans are on track in Cambodia and we see it as a very promising market," he added.
The bank said its total assets were US$195 billion as of December 2008, and it was ranked 74th largest in the world in July.