Globalization and Privatization

New Chmn. Kang to turn KDB Financial Group around for more efficiency and expanded overseas operations


Chairman Kang Man-soo of KDB Financil Group


Chairman Kang Man-soo said he is willing to listen to others on financial policy matters as much as he can during a meeting with press following his appointment as the chairman of the KDB Financial Group last month.
The former Minister of Strategy and Finance and close confidante of President Lee Myung-bak, appeared to be wanting to put to rest rumors that he is a stubborn bureaucrat and doesn't listen to others advises.
Korean financial services firms have long been talking about going global. But in most cases, globalization rarely goes beyond providing banking and other basic services to Korean exporters and expatriate businessmen abroad.
The state-run Korea Development Bank (KDB) prefers to be an international banking force that matters. Such is the confidence built by the banks extensive experience and prowess in investment banking, which it hopes will lay the building blocks for a larger presence across Asian markets and beyond. KDB, now led by its new governor who also is chairman of KDB Financial Group, Kang Man-soo, has announced the goal of becoming a "global commercial and investment bank (CIB)" by 2020. The obvious targets are Asian nations, which collectively are home to more than half the planets population and with easier cultural barriers for a Korean banking group to surmount.
Advancement seen in Uzbekistan, China
KDB's lust for globalization was represented by its acquisition last year of the Royal Bank of Scotland Uzbekistan (RBS Uz). The deal, inked in December last year, saw KDB acquire an 82 percent-plus stake of RBS Uz.
KDB plans to merge with UzKDB, the bank's Uzbekistan unit this year. The combined company is expected to become the seventh-largest lender and the biggest foreign bank in Uzbekistan, KDB officials said.
"UzKDB is our own attack camp as we set to advance further into central Asian nations," KDB said in a news release.
KDB is also planning to open more branches in China, the world's fastest growing economy. The bank will increase its outlets in the country's northeast provinces of Heilongjiang, Jilin and Liaoning, areas where Korean industrial companies are particularly active.
Expanding its business network in western China, a finance market that has been growing at around 15 percent annually, is also among KDB's priorities.
Elsewhere, KDB has been enjoying an expanding presence in Southeast Asian countries like Indonesia, Thailand and Vietnam.
KDB's competitiveness
KDB believes its core strengths lie in corporate financing, project financing (PF), corporate restructuring and the derivatives business, which will provide the key weapons to compete on the global stage, according to KDB officials.
KDB's track record in PF has been particularly notable. The bank was ranked top among global financial companies in the annual public private partnership (PPP) survey for 2010 by Dealogic, a British investment banking consulting firm. The bank ranked sixth in the Asian PF sector and 11th in the comprehensive global PF showing.
The bank says it especially seeks to target the Asian PF market, where spending on infrastructure is believed to reach $8 trillion by 2020 and $800 billion annually.
KDB has top-class capital adequacy compared to commercial lenders, and is equipped with differentiated portfolios to help the lender compete better in the global market.
"KDB has specialized portfolios in corporate financing and investment banking, so we can exploit synergy effects when we advance to China and Southeast Asian nations," said a KDB official.
The lender said Korean commercial lenders are focused on the retail banking business, so it can compete with local lenders when reaching overseas markets.
"We have competitiveness in Asian markets, which are experiencing a similar economic development process with Korea," said Roh Yung-gi, chief of international financing division of KDB.
"We can provide financial services related to corporate financing, PF and corporate restructuring," he added.
Roh said 5 percent of its revenue currently comes from overseas markets, but it plans to increase the portion to 20 percent by 2020 with aggressive international business strategies. nw

Photo on courtesy of KDB,