Chairman & CEO Lee Dong-geol of the Korea Development Bank reiterated his firm management policy that KDB will extend financial help to firms under financial distress only if those firms try their best to save themselves.
The financial community, meanwhile, is eagerly awaiting see what KDB does to bail out financially stricken firms such as Daewoo Shipbuilding. The latter was hit with a 5.5 trillion won loss, the largest in the nation’s corporate history. The Korea Development Bank is reviewing the financials of so called “zombie” business firms to screen them out and let them go out of business. That plan will take hold after the April 13 general elections.
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 to undertake a massive financial restructuring to increase its chances of survival, Lee said.
The new top official promised that no firms under the management of KDB would go belly-up on his watch, a statement 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 reason, he said. “We have to investigate the areas that need restructuring and the areas to be nurtured before restructuring of 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. 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 help their restructuring before it is asked to contribute to 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.”
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 that was 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.
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Chairman Lee delivers his inaugural speech at a ceremony on Feb. 12 at an auditorium of KDB in Seoul.(Photos:KDB)
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