Focus on Stability, Soundness

Pres. Kang: Kookmin Bank to strengthen risk management to fight off the "tsunami" of the global economic slump

President Kang Chung-won of Kookmin Bank said the bank will focus on the stability and soundness of its operation, rather than compete with rival banks. He said soundness is more important than the scale of assets in order to fight the "tsunami" of the global economic slump.
He sees securing stable liquidity as a key to the bank's management in 2009, which can only come from the soundness of the bank's assets.
During an interview with local press, the CEO said he will avoid any excessive competition with rival banks and try to build Kookmin's leadership position in the banking industry and strengthen cooperative marketing efforts with its affiliates.
When asked if he thinks the foreign exchange liquidity crisis is over in the country, he said short-term foreign exchange liquidity has improved somewhat for the banks thanks to government support and the Korea-U.S. currency swap, but difficulties are likely to remain until the first half is over.
Kang said Kookmin borrowed $2.1 billion in foreign exchange loans last year over the $1.75 billion won that the bank had to pay back, somewhat relieving the bank's foreign exchange liquidity problems. But he will still manage the bank's foreign exchange liquidity in a conservative manner, not yet convinced that the foreign exchange market will be out of the woods for some time to come this year.
Kang said government guarantees will help Korean banks to borrow foreign exchange funds without trouble, allowing banks to overcome the crisis under their own power, as government guarantees are meant to minimize the burden on the banks in their overseas financial operations.
The CEO said the bank has enough funds to provide loans to SMEs and doesn't need to increase its capital. He also called for restructuring for the business community in general to overcome the economic crisis sweeping the country.
When asked to comment on funds released by the Bank of Korea returning to the central bank, he said the central bank released cash through the purchase of repurchase bonds and the funds thus created have not been operated properly, idling in the savings accounts at banks. Fund management companies would like to make loans to borrowers with the funds, making it impossible for the banks to use the funds, as they are short-term deposits in nature. But the funds can be loaned to the financial market properly and effectively in support of the market economy.
Due to the uncertainty in the economy, the difficulty in judging sound versus unsafe borrowers has boosted the spread on credit loans of the credit mall. To calm the credit mall, corporate restructuring must come first so that lenders can make as many loans as possible to the firms with sound financials.
The Kookmin Bank CEO said as long as the global economic slump continues, the demand for foreign exchange will continue to remain strong, along with the possibility that the value of the Korean won will grow strong due to the U.S. government's massive supply of dollars. He forecast that the won-dollar exchange rate will average between 1,200 won and 1,300 won per dollar this year. Due to the uncertainty of the world financial market, demand for short-term funds will remain stronger than those for long-term funds, he said, adding that profits on foreign exchange-based financial assets such as stocks will generate better profits in the second half than in the first half. nw

President Kang is on the podium to deliver his speech at the new year's ceremony at Kookmin Bank head office in downtown Seoul Jan. 2.

President Kang Chung-won, right, and executives of Kookmin Bank raise their arms as they swear to run the bank as best as they can this year at the New Year ceremony Jan. 2.