Chairman Lee Dong-geol of Korea Developmenet Bank.

Korea Development Bank (KDB) will ask the government for substantial additional funds to boost its capital in order to reform startups in the days ahead.
Government officials on July 17 said KDB, a state-run bank, is expected to ask for more funds from the Ministry of Strategy and Finance, which was also echoed by KDB officials. They said KDB had its capital reduced due to continued restructuring and it needs more funds to shore up its capital and to support startups. The bank says it’s ready to take action.
KDB is ready to ask for more funds to boost its capital based on the BIS standard, as it is in danger of being reduced if left alone. Capital based on the BIS standard stood at 14.1 percent at the end of 2015, 14.8 percent at the end of the following year, 15.26 percent at the end of 2017 and 15.34 percent at the of Q1, 2018.
 and other financial holding companies to maintain the BIS standard capital ratio at more than 14 percent to be prepared for the enforcement of Bazel III Accounting Regulations in Korea from 2019.
Financial experts think the capital ratio should be around 15 percent, although financial authorities recommend 14 percent or more to be able to satisfy the Bazel III Accounting Regulations.
Some KDB officials think that KDB might have to set up funds for the business firms that went through restructuring, and KDB needs to show that it is a state-run bank and is more than ready to meet the new international financial regulations as a role model to domestic financial institutions.
KDB also believes it is about time for it to play a role in supporting the government’s policy to reform startups. Many startups are venture firms that are considered too risky for commercial banks to lend money to. State-run banks, including the Export-Import Bank of Korea and the Industrial Bank of Korea, are being called on to provide financial support to those startups.
KDB has decided to provide 5 trillion won in financial support to startups every year for the next three years. KDB officials say the funds will be enough to provide 10 billion won each to some 500 reformed startups in one year, and more if the loan is reduced due to the scale of those startups.
It is doubtful whether KDB will get as much money as it wants, although it got 1 trillion won in support funds from the government in 2008 during the financial crisis, a huge sum compared to around 300 billion won it gets generally from the government to boost its capital. In 2015, the bank got 2 trillion won in support from the government, but they were in assets like the bankrupt Daewoo Securities that the government took over.
Officials of the Ministry of Strategy and Finance said the government has to think about allocating funds to support low-income families, although they understand the need to support reformed startups. They will decide the final amount to be provided to KDB after talk can take place between them, officials said.
The Korea Development Bank (KDB) provides long-term financing for projects designed to assist Korea’s economic growth and development. It offers equipment capital loans and working capital loans to Korean private enterprises that undertake major industrial projects. The bank also extends guarantees to its clients to facilitate their other borrowings and to finance major industrial projects.
KDB guarantees Won-denominated corporate debentures, local currency loans, and other Won liabilities and foreign currency loans from domestic and overseas Korean financial institutions and from foreign institutions.
The bank’s other activities include engagement in a range of industrial development activities, including conducting economic and industrial research; performing engineering surveys; providing business analyses and managerial assistance; and offering trust services. As of June 30, 2007, KDB had 40 local branches, 6 overseas branches, and 2 overseas offices. The bank was founded in 1954 and is headquartered in Seoul, South Korea.

The entrance of Korea Development Bank in Seoul. (Photos: KDB)