In a ceremony held on Feb. 12 at the bank¡¯s head office in Yeouido, Seoul, Lee Dong-geol, a former vice chairman and CEO of Shinhan Investment, has been inaugurated as chairman to head the state-run Korea Development Bank (KDB) and the KDB Financial Group for the next three years.
President Park Geun-hye approved his recommendation as chairman of the financial group by the Financial Services Commission on Feb. 4.
The new top manager of the state-run KDB said he is ready to sell off its 90 non-financial affiliates through a nine-person committee set up for the purpose. KDB Capital was not sold in the first attempt and will be put up for sale again. He will aim to sell all 90 non-financial affiliates in the next three years. Lee made the commitment at a media conference following his official inauguration as chairman of KDB and KDB Financial Group on Feb. 18 at the head office of KDB in Yeungdungpo, Seoul.
Lee said Hyundai Merchant Marine needs to restructure its debts, which increased around 1 trillion won every year in the past several years due to ship owners¡¯ excessive ambitions to make money. The shipping firm needs a massive financial restructuring for its survival, Lee said.
The new top official promised that no firms under the management of KDB would go belly-up on his watch, which he intended to refer to the default of Daewoo Shipbuilding and Marine Co., whose financial condition hit rock bottom due to the loss from its marine plant sector amounting to around 5 trillion won in 2015. KDB will not be forced to join a business firm under its care to conduct restructuring without good reasons, he said. ¡°We have to investigate the areas that need restructuring and the areas to be nurtured before restructuring on a company is decided,¡± the new KDB chairman urged.
The new chairman said he knows that KDB ended last year in the red due to the restructuring of the firms under its management due to their poor financial conditions. Potential factors for default could worsen their financial conditions even more.
He went on to say that the absence of ¡°principle guidelines¡± for restructuring has been key to the problem, adding that any firms without their own measures for financial recovery should not get KDB¡¯s help, even if that means bankruptcy. KDB will not hand out loans indiscriminately to firms not trying to help themselves get out of the dire situations they find themselves in.
The new chairman also stressed the need for restructuring, meaning that KDB will try to strengthen the firms already under its management to boost their competitiveness in operation and also to help their restructuring before it is asked for the sake of the health of the national economy.
"Having served at a bank and securities company, as well as the association of securities dealers and university, Lee has vast experience and knowledge in the financial industry," the FSC said in a media release. "Based on his experience in banking and investment banking, he would be the right person to lead corporate restructuring by KDB and add vitality to the economy. That's why we recommended Lee as a KDB chairman."
Lee Dong-geol, 67, replaces Hong Ky-ttack, who was recently appointed a vice president of the China-led Asian Infrastructure Investment Bank.
Born in Daegu, 300 kilometers south of Seoul, Lee began working in the banking industry in 1970 and stayed in the industry until he retired as a vice chairman of Shinhan Investment Corp.
In an inauguration ceremony, Lee vowed to step up efforts to help speed up corporate restructuring.
"The KDB is a policy bank, and as a policy bank it is our task to preemptively prevent companies from becoming weak," he said in his inaugural speech. "We must do our utmost to provide a smooth flow of funds for the country's economic development while also working to help strengthen our firms' competitiveness and improve the overall industrial structure through preemptive restructuring."
He also noted that KDB wouldn¡¯t have trouble investing 50 billion won in the Export and Import Bank of Korea to increase its capital.