KDB on Sales Block

FSC Chairman Jeon says KDB turned into holding company this year and sold next year

Chairman Jeon Gwang-woo of the Financial Supervisory Commission said Korea Development Bank(KDB) will be turned into a financial holding company this year and sold to private investors next year along with its affiliates.
At a news briefing held the head office of the FSC in downtown Seoul, March 20, the FSC chairman said the move is in line with the policy announced by the Presidential Transition Committee and the KDB will have a management system the same as those in advanced countries to maximize its value. He said the fund from the sale of the KDB will be used to form a financial investment firm tentatively named "Korea Investment Fund"which will be managed to do fully the role of a public investment entity.
In the meantime, Gov. Kim Chang-lok of the Korea Development Bank left for Japan March 13 to make calls on important Japanese financial groups to learn from them the ideas to strengthen the bank's investment bank function as the talks of privatization of the state-owned KDB is getting louder.
He is scheduled to meet with Murofushi Minoru, governor of the Development Bank of Japan, Hiroshi Saito, president of the Mizuho Bank, Deisuke Kitayama, president of SMBC, Nobuo Kuroyanagi, president of the Mistubishi UFJ Bank, Junichi Ujie, chairman of Nomura Securities, among others, while he is in Tokyo, KDB officials said March 13.
Gov. Kim is scheduled to call on DBJ first to learn the process of privatization and managemernt strategies following the move because DBJ is similar with KDB in operations. His questions will focus on the way to keep issuing credit guarantees after the privatization, maintaining the same level credit rating and the effective periods of guarantees already issued and securing funds after the privatization, among others, the officials saId.
He will be concerned with forging cooperative ties with Mizuho Bank, SMBC, and Mistubishi-UFJ on IB activities in the world. He is expected to hold discussions on KDB's participation in the financing of the Panama Canal expansion project with Mizuho Bank, a financial consultant for the project.
Gov. Kim will try to hold consultations with SMBC and Mitsubishi-UFJ on matters related to building the base for a financial holding company.
SMBC and Mitsubishi-UFJ became holding companies in 2002 and 2006 respectively. KDB plans to become a holding company with Daewoo Securities and KDB Capital as affiliates. He will try to learn from Nomura Securities the difference between the IB part of securities firm and bank and expansion strategies for global financing.
In the meantime, the government is toying with an idea to create a Korean Themasek, styled after the Singaporean government-owned investment bank by binding into one a number of government-invested financial companies and making large financial holding companies out of such government-invested banks as Woori, KDB and Industrial Bank of Korea, IBK.
The government also has been eyeing turning Korea Investment Corp.(KIC) into a large global state fund by expanding its capital base from $20 billion now to $100 billion.
The move is part of the new government's three large projects to make a global player out of government-invested companies and financial firms.
Government and financial sources said the Ministry of Planning and Finance and the Bank of Korea are discussing ways to bind the KDB, Woori Financial Holding Co. and the IBK into a super financial holding company.
KDB will Daewoo Securities, KDB Capital and KDB Asset Management as its affiliates, while Woori Financial Holding will have Woori Bank, Woori Investment and Securities, Woori Financial, Kwangju Bank, Kyungnam Bank, and LIG Life Insurance as its affiliates and IBK Capital, IBK-SG Asset Management as its affiliates.
Combined assets of these three financial holding companies would come to 540 trillion won, making it the 30th largest financial group in the world. There, however, is no detailed plan to combine these three financial groups as yet, they said.
But, the ultimate plan is to create a super financial group
And a giant commercial bank with other financial holding companies to be made into affiliates. The government also plans to expand the KIC to invest funds from the foreign exchange reserves from the Bank of Korea at home and abroad by expanding its capital from $20 billion to $100 billion.
The government also has on its plan to create a Korean Themasek with its stakes in government-invested companies, excluding the three large financial entities. But the Financial Supervisory Commission and the Bank of Korea are opposed to the ideas, therefore, making the road to push the ideas rougher than expected. nw

Gov. Kim Chang-lok of Korea Development Bank.