Daegu Bank Moves Ahead

Bank aims to achieve global status in terms of profitability, soundness, capital adequacy

Daegu Bank, one of the largest regional banks in the country, has centered its management objective for the year around becoming a bank strong in comprehensive financing to cope with the sluggish banking business, while the non-banking sector financial business has been growing due to impending changes in the financial market with the Capital Markets Consolidation Law coming into effect in February next year. The new law will bring down the walls dividing the financial industry.
President Lee Hwa-eon of Daegu Bank, the largest regional bank in North Gyeongsang Province, said the bank plans to strengthen its ties with its clients, which includes some two-thirds of the total population of Daegu and North Gyeongsang Province, by tightening its financial network in the region to create synergy.
Lee said the bank will further develop its integrated financing through strengthened cross-selling to expand its profit sources and lock up customers for the long term with its extensive distribution network.
The bank has been successfully promoting sustainable management as its main business, which is related to its close ties with the region. The CEO said the bank will continue to seek out community business under its region-centered management.
The bank will also strengthen its investment banking and management consulting services with its corporate customers and public organizations in order to maintain its competitive superiority, Lee said.
He said the bank will make its IB, derivative products, private banking, retirement funds, beneficiary securities and other products strong in line with the trends in the financial industry. In so doing, the bank will be able to streamline its operational structure and diversify its income sources with a special focus on expanding non-interest income.
In order to build such a base, ready to meet future changes, the bank will rebuild its operational structure in such areas as IT, manpower training and general infrastructure to be in line with the integrated financial system. To that end, the bank created the Integrated Financial Business Team at the end of last year and the Future Business Team to strengthen its efforts to find new businesses, the top official said.
To boost cost competitiveness, the bank will reform its personnel make up through reassignment and the expansion of the performance management system along with the expanded use of electronic finance and process reform.
To reduce personnel costs, the bank will improve its personnel management and train financial experts to cut unnecessary expenses so that the bank will have the highest productivity among banks in the country.
On the New Year's management theme, Lee said it can be summed up as "hide the lights and nurture power secretly in the dark."It is a strategy created by a famous Chinese intellectual during the three-kingdoms period of China. Under a strategy to divide the nation into three parts, the famed strategist waited for the right time to strike out with armed forces he trained secretly in an isolated region.
Lee said the bank made significant progress in the area of sustainable management last year in terms of ethics, environmental management and social contribution. "Now, the bank should not stop its march of change and reform with sustainable management as its base,"Lee added.
Daegu Bank is headquartered in Daegu, but its performance record and operational activity have been on the level of the world's top banks and it is aiming to be among the 100 best banks in Asia by 2010. The bank has always been stressing to its employees to think globally and act regionally. Lee said he bought a large briefcase to each employee of the bank when he first took over as CEO and suggested that they should travel around the country and the world and come home with a global mindset. He said they should provide global financial products and services to local customers, not just depend on their regional loyalty.
The top manager said he will try to make Daegu Bank a globally superior bank during the remainder of his term in office in terms of ethics, environment, social contribution and soundness of assets, not just in the size of assets and the scale of operation.
He said the bank should be a model for sustainable management and all other areas of operation in the region.
The bank should make transparent and ethical management take root in its operation by upgrading its IR, public notices, accounting, internal controls and corporate governance structure to a world level. Furthermore, the bank should undertake activities related to environmental management and social contribution in a positive manner to do its duty as a responsible corporate citizen.
In the meantime, the bank won the 2007 Asia Best Management Company Award from Asiamoney, a sister publication of the reputable Euromoney.
Asiamoney noted that Daegu Bank is one of the few banks in Asia that has been focusing on environmental and ethical management as its top priorities. The financial publication continued that President Lee Hwa-eon of the bank transformed the bank's corporate culture through employee satisfaction management and, thus, won a reputation as a top executive who is market-friendly and very much focused on overseas investment relations to attract foreign investment to the bank.
The bank is known for its survival of the financial crisis of 1998 without the help of government funds, unlike all of the major banks in the country. In 2007, despite the difficulty, the bank was able to increase its income by 8 percent to 260.8 billion won and catch up to advanced banks in the areas of profitability, soundness and capital adequacy. nw

(photo left) President Lee Hwa-eon of Daegu Bank.
(photo right) Daegu Bank President Lee shakes hands with an official of AsiaMoney after receiving the 2007 Asia Best Management Company Award at a ceremony in Hong Kong on Feb. 21.