Eyeing Global CIB Status

KDB Financial Holding plans to take over one or two banks in S.E. Asia this year to expand corporate investment banking role

Korea Development Bank has its work cut out for it as it has to play a key role in making Korea a financial hub in Northeast Asia in line with government policy by setting up its vision to become a leading bank in Asia by 2011. To broaden its business territory beyond the nation’s borders, KDB will focus on its four core financial services ― corporate banking, investment banking, international banking, corporate restructuring & consulting ― targeting customers both at home and abroad.
The bank hopes that its experience and expertise accumulated over the past five decades will undoubtedly serve as a cornerstone for KDB to forge ahead. By remaining responsive to the ever-changing needs of its customers and offering quality tailored financial solutions, KDB looks forward to seeing its list of international clients and business partners grow in the years ahead.
KDB Financial Group was officially launched in October, last year to assume a greater role in building a financial hub in Korea for Northeast Asia. Having played a huge role in Korea’s economic development for 56 years as the nation’s principal policy bank, KDB is now part of the KDB Financial Group along with Daewoo Securities, a leading securities firm in Korea, KDB Capital, KDB Asset Management, and Korea Infrastructural Investments Asset Management.
With the goal of nurturing a homegrown global corporate investment bank (CIB), the government, in June 2008, announced its plan to privatize KDB, which would begin with the spin-off of the bank’s policy functions. The plan called for the establishment of a holding company that includes KDB, a corporate banking expert and Daewoo Securities, a leading securities firm, as subsidiaries.
The financial group set its 20-20-20 vision under which it will strive to become Korea’s representative global CIB and one of the world’s top 20 CIBs by the year 2020 by putting into good use its accumulated financial know-how and customer base and actively expanding into overseas financial markets.
KDB signed an MOU with Abu Dhabi Investment Co. and Korea Trade Promotion Agency (KOTRA) to help increase investments between Korea and the Middle East and the North Africa region. The MOU lays the groundwork for cooperation in many areas, including cross-border mergers and acquisitions and private equity, infrastructure and portfolio equity investment.
The instrument was signed during a visit to Seoul by a trade delegation from the United Arab Emirates (UAE), led by H.E. Nasser Ahmad Khalifa Al Suwaidi, chairman of Abu Dhabi Department of Economic Development, and vice chairman of ADIC.
On June 7, a day before the MOU signing, KDB explained the investment opportunities in Korea for the UAE delegation at its head office, covering key development projects and private equity funds managed by KDB.
Chairman Min Euoo-sung of the KDB Financial Holding Co., who also heads the Korea Development Bank (KDB), said he plans to take over two or three local banks in Southeast Asian countries like Thailand and Indonesia this year to make KDB a corporate investment bank representing the whole of Asia. In an interview with a local daily, Min said the KDB’s focus will be on expanding its financial network in Asia so that it will be able to provide project loans on natural resources exploration projects in the region with funds secured locally through M&As with local financial institutions.
The KDB CEO said the bank is in serious consultations with the financial authorities to promote its overseas operation plans, signaling that the plans have been concluded already, requiring only official approvals.
KDB will also take over a local bank in Uzbekistan to bring its local operation to the 5th largest in the central Asian country. KDB also has plans to secure part of Eastern Europe’s project financing market.
Regarding the possibility of taking over Korea Exchange Bank, Min said its price has been increased far higher than expected at over 6 trillion won and with that kind of money, it would be better off for KDB to buy a couple of local banks in Southeast Asian countries in terms of profit earning, although he is aware of various synergies from taking over KEB including a broader deposit base. With the government a major stakeholder in KDB, it would be illegal for KDB to make bids in an open bidding for KEB, he said. nw

Chairman & CEO Min Euoo-sung of Korea Development Bank.