SEOUL - SOUTH Korea's state-funded KDB Financial Group Inc is seeking to buy South-east Asian banks, instead of merging with Korea Exchange Bank (KEB), as the market expected, the group's chief said on Sunday.

'KDB Financial is interested in the Asian market and currently watching two or three banks in South-east Asia,' KDB Financial Group Chairman Min Euoo Sung was quoted as telling Yonhap News Agency. 'Basically, KDB Financial is more interested in overseas banks than KEB,' he said.

Mr Min said KEB became prohibitively expensive with its shares rising nearly three-fold to around 14,000 won (S$16.70) from late last year.

Mr Min's remarks dampened market speculation that KDB Financial might take over KEB to diversify the state-owned lender's funding sources. KEB is currently owned by US buyout fund Lone Star Funds.

KDB Financial Group hopes to buy foreign banks in South-east Asian countries including Indonesia, to beef up its capacity for loan operations, Mr Min told journalists last week.

Mr Min also said the group would seek to enter developing Asian markets in need of financing services for infrastructure, including railroads or ports. -- AFP