IBK Sets High Targets

Bank to focus on globalization with subsidiary in Beijing and operations in other countries

The Industrial Bank of Korea has reorganized its operational set up by creating the International Business Department recently in line with the bank's plan to find new growth engines and globalize its operations.
An outstanding feature of the move was the strengthening of its global operational set up by making the overseas section of the international business division into a separate department.
The new department will take charge of the bank's international operations including the matters involved with setting up a wholly-owned subsidiary in China, acquisition of local banks in the countries in which the bank has a presence and large overseas projects for the bank. The unit will also handle the bank's advancement into foreign countries such as India, Mongolia, Russia and Vietnam, among other new emerging market countries around the world. The old international department minus the overseas business section will focus on strengthening foreign exchange marketing and create strategies to increase profits from foreign exchange deals and extend support for the bank's various foreign exchange operations.
The bank also set up a channel business team in the marketing department to take charge of the issuance of credit cards, strengthen the welfare expenses and research expense card businesses. The bank has also set up a retirement fund team to strengthen its presence in the retirement fund market.
In the meantime, IBK has decided to set up a securities company in line with the new Capital Markets Consolidation Law coming into effect next year to handle IPOs, the issuance of bonds by SMEs and M&As in an effort to provide comprehensive financial services to its SME customers.
The bank's board of directors approved the move at its meeting on Dec. 28 and the projected securities firm will have 300 billion won in capital with some 250 employees initially. The new securities firm will be engaged in a wide area of securities businesses including stock transactions, and M&As -- all businesses handled by securities firms in the country.
IBK's operational base is considered strong with some 1,200 of its SME customers eligible to list their shares on the stock market, and many of them competitive in terms of technology and other areas with optimistic future growth prospects.
IBK will try to make its securities firm a "Goldman Sachs in Korea, very strong in handling such deals as investment and M&As, and expand the number of SMEs with IBK equity investments to some 2,000 firms by 2011.
IBK officials said when the proposed securities firm is launched with the approval of the Financial Supervisory Service, it will be able to provide direct financing service to SME customers as they wanted. IBK's total assets will amount to 220 trillion won, helped by its securities affiliate providing an integrated financial service and becoming the basis for IBK to be a top financial group in the country.
In the meantime, IBK, in cooperation with the Korea Credit Guarantee Fund for Technology, will provide some 50 billion won in loans to various SMEs to aid their R&D efforts to find new growth engines.
The eligible borrowers of the 'leader biz-loan'must have more than 300 million won worth of assets and more than one year but less than 3 years in operation and be considered to have excellent future growth prospects. They must also have a technology credit rating of BB or above by the KCGFT.
The special loan facility will release loans at a beginning annual interest rate of 3 percent, in line with the call for spurring R&D efforts to find future growth engines. Borrowing is capped at 200 million won. The interest rate comes to only half that of general loans, from 6 to 7 percent per year, but repayable in five years at the maximum with variable interest rates per year.
The interest rate starts at 3 percent, but climbs to 3.5 percent in the second year and 4 percent in the third year. nw

Chairman Yun Yong-ro of Industrial Bank of Korea.