A case study of Korea First Bank : Newbridge Capital's takeover of Korea First Bank

Abstract

This thesis, by examining the sale of Korea First Bank to Newbridge Capital as one case study, aims to discuss how Newbridge successfully recapitalized the ailing Korea First Bank. In December 1997, Korea s economy collapsed. KFB was deeply impacted. Due to business failures of some of its corporate customers, a sharp increase in NPLs and the departure of customers from the bank, the bank experienced many difficulties. During this process, the workforce shrank by over 40% and was recapitalized twice. The government took over the bank in 1997, with a view to protecting depositors, and ultimately searched for a foreign investor to rebuild KFB. In December 1999, the government sold 51% of KFB to Newbridge Capital, a private equity firm from the U.S. in a precedent setting transaction. Newbridge Capital invested won 500 billion into Korea First Bank in January 2000, and appointed Wilfred Y. Horie as the Bank s new president, followed shortly thereafter by the installation of a new management team. During the first year of its acquisition, KFB achieved the first profitable year since 1996. And credit rating agencies Moody s and Standard & Poor s have each upgraded their long-term ratings for Korea First Bank (KFB) by two notches. On top of these achievements, it has set an industry example that can have exponential effect in encouraging further and better Korean banking reform.