Beefing up IB House

Korea Development Bank to focus on strengthening IB sector at home and overseas

The enactment of the Capital Markets Consolidation Act means that the financial industry will be turned around to become part of the export industry, and the Korea Development Bank has reflected all the key elements of the act in its new strategy to shift the bank's operation into high gear, and stop being a bank providing funds to corporations.
As an example of its new operational strategy, the bank points to the likes of DBS of Singapore and Macquarie of Australia, which have been developed enough to represent their countries in the international financial arena emerging as new hubs of global finance, increasing the competitiveness of their countries.
Korea still lacks investment banks, allowing foreign IBs to dominate its IB market while domestic banks are left to grow only through retail banking. Foreign IBs have been at a high level of the international financial market to the extent that some of them make over 40 percent of annual profits abroad, exposing the gap that Korean banks have to yet to close.
KDB is the only bank in the country that can be fostered quickly enough to become an investment bank as it has accumulated a good deal of experience in the international financial market through raising funds by issuing debentures both at home and abroad, in addition to such financial activities as investment, acquisition and lead managing related to the capital market.
With the situation as such, KDB plans to step up globalization of its IB business and the exploration of foreign financial market.
KDB has already been progressing in its IB business overseas by taking on the IB areas in which it is strong such as PF, PEF, and M&A, making inroads into new emerging financial markets such as those in Asia. The bank will also strengthen cooperative ties with Korea National Oil Corp. and other related companies for the exploration of natural resources overseas such as energy.
In order to advance its IB business, the bank needs a network to explore overseas markets and compete with foreign IBs currently dominating domestic IB market. KDB will enter the promising growth regions, the regions shunned by domestic banks due high risk, regions where there are many chances for IB activities such as project financing and social overhead capital projects and the regions with vast untapped natural resources.
KDB has been setting up new offices or taking over local banks through M&As and investing in stakes in such newly emerging markets as India, Indonesia and Vietnam.
KDB will continue to develop its operations in Hong Kong, London, Hungary, Uzbekistan, and Brazil under its mid-to long-term plan to the extent that many progresses have also been made.
KDB Hong Kong has been dealing with syndication, and asset management areas with the goal of playing a central role in the Asian capital market centered around the IB businesses. KDB London has been focused on foreign exchange and derivative trading businesses to in order to emerge as a specialist in those fields and to develop its international financial business through advanced financial techniques.
KDB Hungary has been eyeing to be a Korean financial institution in the Eastern bloc in the area of investment banking and UzKDB has been fostered to be a representative bank in the Central Asia including Kazakhstan which is rich in natural resources. KDB Brazil will eventually be developed enough to become a bridgehead in Latin America for Korea.
Korea Development Bank was designated as one of the top ten regional banks for two consecutive years by Asia Risk magazine.
In the magazine's 2007 End-User Survey, a poll of Asian derivatives investors, KDB received high scores in the interest rate swap and option categories. KDB was the only Korean bank on the Top Regional Banks list this year.
KDB traded 197 trillion won (in terms of amount outstanding) in 2006, taking the lion's share in the domestic derivatives market.
"As the pioneer of Korea's derivatives market, which had remained undeveloped up until the 1980's, KDB has successfully raised its trading volume and risk management capabilities. Helping domestic companies effectively hedge currency risks, KDB is acting as a market maker for Korea. I believe this is why we were named a top regional bank by Asia Risk,"said Ahn Dong-myong, General Manager and Head of Trading Center at KDB. nw

Gov. Kim Chang-lok of Korea Development Bank.