KDB to Further Push Globalization

Bank adds more branches in China and Central Asia, while getting ready for privatization as part of KDB Financial Group

Fitch ratings has affirmed Korea Development Bank's (KDB) long-term foreign currency issuer default rating (IDR) at 'A+' and short-term IDR rating at 'F-1' with an outlook of 'stable.'
KDB's ratings reflect Fitch's expectations of an extremely high probability of government support and are equalized with South Korea's sovereign ratings. Article 44 of the KDB Act obliges the Korean government to replenish any deficits at the KDB if its capital reserve funds fail to cover them. KDB, a wholly owned subsidiary of KDB Financial Group (KDBFG), is effectively 100-percent owned by the government, given that the Group is 9.7 percent directly and 90.3 percent wholly owned by the government through Korea Finance Corp. (KoFC; 'A+/Stable).
KDB and KDBFG have a privatization plan and are committed to commencing initial sales of KDBFG shares by May 2014 as per the KDB Act. To facilitate privatization, they have tried to acquire a commercial bank or financial group, but have so far been unsuccessful. Fitch believes that mergers and acquisitions are unlikely to happen under the current administration.
KDB will make efforts to strengthen its competitive strength as it gets ready to privatize its operation.
KDB officials said the bank has successfully concluded its plan to strengthen its growth base by strengthening its system and the health of its structure for continued growth. This year, the bank will strengthen its operation by taking advantage of its core capacity to expand its turnover and quality in an effort to continue to boost KDB's position as a leader in Asia's financial circles.
In this regard, the state-owned bank has set two major goals this year: to expand its operational assets by 8.2 percent net, or 7 trillion won, and to supply 32 trillion won in loans.
In order to achieve the target, the bank will conduct organizational changes by setting up a new credit control team and, at the same time, strengthen the strategic planning team.
Through the new credit team, the bank plans to set up the new direction for its credit policies and the implementation plans based on the financial market's situation so that its market support would be more systematic, as well as strengthen the management of its loan portfolio and the development of new financial products.
In particular, KDB will focus on the development of new financial products, services and marketing support plans that are satisfactory to its customer niche through the Corporate Investment Bank under the KDB Financial Group. Ultimately, KDB wants to come up with its own competitive power to differentiate it from its rival banks in Korea.
Under the reorganization, the channel strategic planning function has been transferred to the Planning Management Headquarter and also plans to expand the operation of the Financial Plaza by affiliates and other units related to IT.
Personnel exchange among affiliates will also be expanded, aimed at personnel training and synergy among affiliates. First, Daewoo Securities and KDB will exchange professional personnel to create synergy between the two key affiliates of KDB Financial Group.
KDB is also considering strengthening the power of CEOs in charge of the headquarters responsible for manpower management, training and budgets for more effective management in order to maximize the results of their operations.
The state-run KDB prefers to be an international banking force that matters. Such is the confidence built by the bank's 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.
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 northeastern provinces of Heilongjiang, Jilin and Liaoning, areas where Korean industrial companies are particularly active. The bank will also step up its activities in Indonesia and Vietnam in the near future. nw

Chairman and President Kang Man-soo of KDB Financial Group.

Photo on Courtesy of KDB