KDB's Diversification Needs

Gov. Kim to add insurance, securities businesses to beef up the bank's service

"The Korea Development Bank has the responsibility to provide financial support to business companies which are core growth engines for the country, which is why the bank needs securities, asset management in addition to banking to provide full financial services to those companies that want full financial services, not just banking,"Gov. Kim Chang-lok said in explaining the bank's future strategy.
What KDB should be in his mind is that it should be an integrated financial group in the future and as first step toward that direction, the bank will work closely with Daewoo Securities Co., its affiliate, in the area of investment banking so strengthen synergy between the two financial institutions.
This year, KDB and Daewoo Securities Investment Banking Dep's will upgrade their mutual cooperation by enhancing the infrastructure that will bind these two financial institutions, putting an end to their ties, which so far have been loose.
By the end of this year,
a blue print will be finished that will combine the business tie up between them. The combination of KDB's financial network including project financing expertise and the securities firm's IB capability would give birth to a top investment financial group, the KDB governor said. The new entity would be stronger if KDB Asset Management is added, making it a full financial group equipped with all kinds of financial services.
The KDB CEO pointed out the growth of Australia's Macquarie Bank, which became a leading bank in the area of investment in real estate and social overhead capital in the world in such a short period of time.
He also pointed to the growth of the Development Bank of Singapore, which became privatized in 1997 and has been emerging as a retail and corporate bank in Asia to show KDB's roadmap for its future progress. The KDB chief said ultimate aim for KDB is to become like UBS, a top IB financial group built around banking.
The upgrading KDB would be great help for the development of financial support programs for North Korea after the unification is achieved. The state-owned KDB's growth would also be a great help for the country's investor relations and attracting foreign direct investment in North Korea.
Should KDB sold to private bidders with the implementation of the Integrated Financial Law, it should be sold as an integrated financial entity comprised of banking, securities and asset management to a good price, Kim advised.
The Ministry of Finance and Economy is said to have set up a task force to map out the future course for KDB and they are about to conclude that it should be privatized in long term prospective.
The KDB governor said he doesn't know when the bank will be sold, but it would be during the period when the country's per capita GDP reaches the $20,000 level and the country's industrial structure is upgraded to center around the service industry.
KDB plans to expand its overseas operations in earnest this year and its operation system will be changed to the extent that no wall will divide the domestic and external business sectors. The bank will try to expand its presence in Indonesia and China this year in three northern provinces of China in particular. It has already signed MOUs with those three provincial governments.
Its foreign operation is such that over 40 percent of its fees for writing bonds would come from overseas which stands at 16 percent now.
KDB plans to provide 2 trillion won for the growth of the service industry including the development of silver environment culture and the electronic commerce industry, in addition to extending 7 trillion won for SMEs, 1 trillion won more than last year. It will also provide consultancy to SMEs that want to go abroad. nw

Gov. Kim Chang-lok of the Korea Development Bank (right) and the KDB head office building in Seoul.