Chairman Hong Ky-ttack of the KDB Financial Group has been appointed a vice president of the Asian Infrastructure Investment Bank (AIIB), the finance ministry said Feb. 3.
Hong Ky-ttack, who also runs the state-run Korea Development Bank, will serve as the chief risk officer of the AIIB. He will be one of five vice presidents.
Hong will start his three-year tenure after the AIIB sets the exact inauguration schedule, according to the ministry.
It is the first time in 13 years that South Korea will take on a vice presidency post in an international financial institution.
The AIIB was formally launched on Jan. 16, with 57 founding members, including South Korea, in a bid to promote economic growth in the Asian region by supporting infrastructure investment.
South Korea has a 3.81-percent stake, the fifth-largest among member countries.
The Korean government recommended Hong Ky-ttack, the chairman of Korea Development Bank (KDB), as one of the four vice presidents of the China-led Asian Infrastructure Investment Bank (AIIB). The recommendation stemmed from a request by Deputy Prime Minister Choi Kyung-hwan for the appointment of a Korean as one of the vice presidents of the AIIB. Choi and Hong met with AIIB President-nominee Jin Liqun during his visit to Korea last year. It was then that Choi asked Jin to appoint a Korean as one of the vice presidents of the infrastructure bank.
Korea also recently recommended multiple candidates to the Presidential Office of the AIIB, including World Bank Director Eun Seong-soo, former Asia Development Bank senior economist Lee Jong-hwa, and former Deputy Minister of Strategy & Finance Heo Kyong-wook.
The AIIB is an international financial institution that aims to support the building of infrastructure in the Asia-Pacific region. The bank was proposed as an initiative by the government of China, supported by 37 regional and 20 non-regional Prospective Founding Members (PFM), all of which have signed the Articles of Agreement that form the legal basis for the proposed bank. The bank will start operation after the agreement enters into force, which requires ratifications from 10 member states holding a total number of 50 percent of the initial subscriptions of the Authorized Capital Stock. On Dec. 25, 2015, 17 states (Australia, Austria, Brunei, China, Georgia, Germany, Jordan, Luxembourg, Mongolia, Myanmar, the Netherlands, New Zealand, Norway, Pakistan, Singapore, South Korea and the United Kingdom) together holding 50.1 percent of the initial subscriptions of Authorized Capital Stock, had deposited the instrument of ratification for the agreement, triggering entry into force, and making them all founding members and bringing the Articles of Agreement, the bank's charter, into force. Twelve other states followed later, taking the amount of Authorized Capital Stock held by the 29 members of the bank to 74 percent. Major economies that did not become PFM include the United States, Japan and Canada.
The United Nations has addressed the launch of AIIB as having potential for "scaling up financing for sustainable development" forglobal economic governance. The capital of the bank is $100 billion, equivalent to two-thirds of the capital of the Asian Development Bank and about half that of the World Bank.
The bank was proposed by China in 2013 and the initiative was launched at a ceremony in Beijing in October 2014. In June 2014 China proposed doubling the registered capital of the bank from $50 billion to $100 billion and invited India to participate in the founding of the bank. On Oct. 24 2014, 21 countries signed a Memorandum of Understanding regarding the AIIB in Beijing, China: Bangladesh, Brunei, Cambodia, India, Kazakhstan, Kuwait, Laos, Malaysia, Myanmar, Mongolia, Nepal, Oman, Pakistan, Philippines, Qatar, Singapore, Sri Lanka, Thailand, Uzbekistan and Vietnam. Indonesia's joining was slightly delayed due to their new presidential administration not being able to review the membership in time. Indonesia signed the MOU on Nov. 25, 2014.