Chairman Han Dong-woo of Shinhan Financial Group. (Photo: SFG)

Korea Development Bank held a joint workshop with the German Reconstruction Bank, KfW, on the subject of “Unification Finance” as part of its strategy to create financial products for the eventual unification of the two Koreas, particularly to rebuild North Korea’s industrial infrastructure and social overhead capital.

KDB plans to push for a joint venture with North Korea’s state-run enterprises to further promote Unification Finance. On its 60th anniversary in April, KDB announced five major mid- to long-term strategies to prepare for the unification of the two Koreas, which was followed in July with the establishment of the Body for Unification Finance with Korea Finance Co., an integration of the unit for the study of the unification finance that the two financial companies operated to study of financial matters under a unified Korea.

Gov. Hong Kyttack met with Chairman Ulrich Schroder of KfW in July and agreed to jointly undertake various projects related to unification finance.

The workshop that took place in October at the headquarters of KfW in Frankfurt, Germany, was the first step in an agreement reached in July between Governor Hong and Chairman Schroder. The theme of the workshop — “Unification Finance and the Challenges for Development Financial Institutions”—was to discuss in detail a number of cooperative projects that could be undertaken between the two state-owned banks.

KfW was the German bank that provided financial support to large and small German firms engaged in industrial projects to rebuild the German economy from the devastation suffered during the World War II, which was later called “The Miracle on the Rhine.” The bank also provided financial support to industrial projects in East Germany after reunification.

Chairman Hong said at the workshop that KfW’s financial role in the economic integration of the nations is a valuable experience that KDB must learn, as it plans to achieve its own version of unification finance with the two Koreas in the near future.

Hong went into some detail on KDB’s plan to provide financial support after reunification takes place: North Korea’s infrastructure construction — with the civilian participation — joint-venture projects with North Korea’s state-owned companies, and support to the projects to be undertaken by foreign investors in North Korea. 

Chairman Hong also called on KfW to provide financial support to business firms with operations in the Gaeseong Industrial Complex in Gaeseong, North Korea, the opening of a new industrial complex in North Korea, and participation in international support programs to North Korea.

In the meantime, KDB will seek to play an important role in forming a yuan market in Korea, Chairman Hong said recently.

“For globalization of the yuan, financial institutions overseas are developing diverdse financial products to the yuan and making efforts to set up an infrastructure,” KDB Chairman Hong said at an international conference held in Beijing, which was jointly organized by the International Finance Corp., the Industrial and Commercial Bank of China and the Institute of International Finance (IIF). It took place on Sept. 17 and 18 under the theme of “Sustained Growth and Financial Reform in China.”

At the forum were key figures of the global financial industry, including heads of the ICBC, and City of London, as well as delegations from BOA Merrill Lynch, JPMorgan, Ford and Alibaba. Hong attended the fifth session as a panelist, where bilateral cross-border capital transactions in China were discussed.