Leading Bank for SMEs
IBK plans to beef up its operation to be a first-rate global bank by 2010

The Industrial Bank of Korea, observing its 44th founding anniversary on Aug. 1, has focused its operations on strengthening its consulting service to small and medium companies who are its customers during the past year of the bank's president Kang Kwon-suk's leadership.
The bank has been at the forefront of providing financial support to those small and medium firms in the country as they are a key part of the national economy in terms of production and providing jobs.
In January this year, the bank assembled some 2,000 CEOs of those SMEs to listen to their stories of their current problems and the bank got the idea that the best solution for their problems is building a live-and let-live structure with large firms. The bank found out that large firms pay too little to SMEs in terms of their profit and small firms are pressed for funds to even to expand their investment in R&D.
Following are excerpts from an interview with Kang Kwon-suk, President of the IBK on the occasion of the bank's 44th founding anniversary on Aug. 1 this year.
Question: What are some of the major projects you have been pushing since you took over the helm of the IBK?
Answer: IBK has been a leading bank for small and medium firms in the country in terms of providing financial support. The bank has become the top bank in terms of loans provided to SMEs. As of the end of April, the bank's share of loans provided to SMEs reached 58.3 percent.
In August, last year, the IBK became the first bank in the country to come up with its Network Loan Facility and provided 939.7 billion won to 3,802 small and medium firms as of July 13.
The bank also held 9 meetings in Seoul and other local cities under the title of the Economic Outlook for 2005 and Briefings on IBK? SME Support Plan. The bank has been able to gather some 2,000 CEOs of those small and medium firms to the meetings and listen to their problems.
The IBK also declared in medium to long term Vision, including its objectives to grow to become the fourth largest bank in the country and among the 100 largest banks in the world by 2007 and by 2010, it will be the third largest bank at home and 50th largest banks in the world.
The vision also included the bank's effort to strengthen its office work promotion system including customer service. In September last year, the bank built the next generation system and also developed Network Loan, Medical Network Loan and e-branch system.
The bank also developed an integrated loan financial service system. In cooperation with Societe Generale, the bank set up an asset management company, along with a base to provide a comprehensive financial service including insurance together with Korea Investment Holdings Co.
The bank also expanded its personal loan facility for balanced growth and secure low-cost funds to provide low interest loans to SMEs.
The bank also secured the services of 2,800 post offices around the country to provide such services as withdrawal of deposits, and checks on deposit balance.
The bank also launched the PB brand for professional management of heads of SMEs.
Q: This year, too, the bank admitted new members to the Hall of Fame for SME Heads and could you tell the readers which firms were admitted?
A: Since my appointment, I found out that there are many wonderful SMEs. The general public knows a lot about large firms only, but they don't know that there are small and medium firms competing in the world for top place in their respective fields in terms of market share and technology. On Aug. 1, last year, the bank set up the Hall of Fame for Small and Medium Businessmen with the purpose of publicizing the existence of many outstanding small and medium businessmen. We wanted to have pride in their work and also staff of the bank to boost their pride that they have helped those businessmen to grow.
Last year, the bank selected president Kim Dong-soo of Korea Ceramics, president Kim Sang-myun of Jawha Electronics, president Kim Jae-kyung of Intops, president Hong Wan-ki of HJC Co. This year, the bank selected chairman Park In-chol of Sun Star Special Precision, chairman Lee Chung-kon of SL Co., and president Choi Kwan-soo of DGI Co. In order to make the admission decision, the bank set up the selection committee headed by Dr. Chung Woon-chan, chancellor of Seoul National University with the selection criteria being companies that climbed to become world-class and CEOs of companies with superior credit ratings and commanding social respect.
Those that made the selection will be made models of success to all small and medium firms in the country with the help of academia.
They will be allocated with a booth in the Hall of Fame so that their records would be preserved for years to come.
Q: What are the results of Network Loan?
A: As of July 13, the bank disbursed a total of 939.7 billion won to 3,802 firms under the new loan facility, which was launched on Aug.2, last year.
The IBK was the first bank in the country to develop the loan facility to spur national economic growth through the expansion by solving fund shortages of SMEs and expand credit provided to them.
One of the purposes of the loan facility is to provide operation funds to the needy firms and have them grow. The bank plans to disburse some 2 trillion won under this loan facility.
The bank also has been operating the network loan for medical facilities since June and we expect some 70,000 medical clinics and drug stores to benefit from the facility.
Q: Since your take over the helm of IBK, you have been stressing theory of doctor in charge for business firms. Can you explain this?
A: The bank should play the role of a leading economic indicator to have banks and their customers to live together. When the economy is bad, the banks should support sound firms in temporary liquidity crisis so that they would go again when the economy recovers. Furthermore, the bank should provide advises to corporate borrowers business activities and have them ready for all kinds of situations.
In order to take on a role like this, branch managers should always have close watch on their customer firms like family doctors. Banks should be equipped with all kinds of high-tech facilities so that they would be able to diagnose any difficulties and give them the prognoses just like a well-equipped general hospital.
The IBK has been privy to all kinds of economic information through its economic research unit, along with professional management support programs. It was able to develop a product that can really help our customers including Network Loan Facility and building an integrated financial service system including securities and insurance.
Q: What are the current status of business tie-ups with global financial institutions and synergistic effect from IBK's tie-up with Korea Investment Holdings Co.?
A: The SMEs need not just loans, but their need for other financial services have been rising. In order to cope with the situation, the bank has been strengthening its non-interest income sectors by setting up an asset management unit and forging business tie-ups in such non-banking areas as securities, and postal service.
The bank set up a joint venture asset management company with Societe Generale in September last year in a bid to learn advanced financial techniques to expand the base for personal loans. The company went online on Jan.17 this year and its deposits amounted to 2.109,4 trillion won as of the end of June.
The business areas with Korea Investment Holdings Co. including non-banking areas and those than can generate synergistic effect.
First, the areas include IPOs for small and medium firms, mergers and acquisitions. bond issues, ABS and investment banking, to name just a few.
Second, the joint sale of derivative products for the benefit of customers, the sale of beneficiary certificates issued by asset management companies and others.
Third, the increase in the number of customers of both parties through joint marketing, the establishment of securities units inside branches, joint access to research material and joint ownership of Internet contents. The bank has been providing high-profit and good-quality securities services to customers in addition to its own financial services.
Q: Can you tell us your bank's plan to strengthen its competitive power on the occasion of the founding anniversary?
A:The IBK observed its 44th anniversary this year. Domestically, the bank plans to firm up its position as a leading bank in the SMEs financial market, envisioning an escalated competition among banks in the second half.
Banks' competitive strength depends on a structure for sharp reaction, tough and precise strategies and global capability to compete with banks in advanced countries.
The IBK has been pushing its plan for enhancing its competitiveness steadily. In 2002, the bank established the business department system, and has successfully installed the next generation electronic operation system.
At the present time, domestic banks have been competing for the same customers and the similar services and products. Under the circumstances, strong enforceability will determine who will come out as winners. For this purpose, the bank set up the management reform planning team and the economic research institute to strengthen its predictability.
Through this, the bank plans to win over its rivals based on delicate strategies and strong enforceability.
Large foreign banks and domestic banks are separated by their global capabilities and the IBK needs to strengthen its global operations.. It will forge tie-ups with foreign banks, train personnel, hire foreign financial experts and expand its operations in China and Europe to continue to expand its global operation capability.
It will continue to build up its integrated financial service system to cope with diversified financial needs of customers. nw

President Kang Kwon-suk of the Industrial Bank of Korea.