The fund to keep its BIS ratio up and also for use in loans to biz firms for restructuring and reform; Chmn. Lee calls for the participation of international financial organizations, government-owned and private commercial banks to take charge of the fina
Chairman Lee Dong-gull of Korea Development Bank. (Photo:KDB)
Chairman Lee Dong-gull said Korea Development Bank(KDB) and all other state-run banks, commercial banks, foreign banks and financial organizations should participate in the inter-Korean economic projects to ease the risks. He made the statement while meeting with media on the occasion of his first anniversary as the CEO of the state-owned bank.
He said there are too much risks in the inter-Korean economic projects including many projects connected with railroads and highways which are too big for one or two banks to take charge of the financial matters.
Lee just returned from Vladivostok, Shenyang and Dandung, China, in connection with drawing up the basic plan for the economic cooperation between the two divided Koreas. KDB, Eximbank, commercial banks and international financial organizations are expected to take charge of the financial matters for the projects.
The government will take measures to boost the capitals of the two state-owned bank, the Korea Development Bank(KDB) by 500 billion won, the Financial Service Commission said on Aug. 30. FSC said the fund will be drawn from 3.1 trillion won the commission secured to be provided to the state-owned financial institutions so that they won’t have trouble meeting the BIS capital ratio, which is to be enforced on all financial institutions next year and also no trouble providing financial support to the reform business firms and the restructuring of the business firms.
KDB asked for substantial amount of funds to boost its capital to the government in July and the government discussed the request with KDB and agreed to give only 500 billion won to increase its capital. Officials of the Ministry of Strategy and Finance said it is very difficult to give enough funds to all the state-run financial institutions to boost their capital and we will have to see about the additional funds next year.
The government fund infusion was a big help to KDB as it can take care of the problems meeting the BIS rate that could do further down when it dishes out more loans. The BIS ration in March stood at 15.34 percent, which can go down if the bank provides more loans to the companies that have to go through restructuring.
The government fund will keep KDB’s BIS deteriorating further even if it has to dish out more loans, KDB officials said.
The government fund will help KDB to continue to provide loans to the financially-strained small business operators.
Daewoo Securities, one of the largest and most successful brokerage firms in Korea, became a subsidiary of KDB in May 2000. Since then, Daewoo Securities has managed to maintain a stellar amount of growth, generally exceeding analyst expectations. Even during the recent credit crisis, Daewoo Securities has managed to come out much less damaged than its peers due to solid risk mitigation procedures.
It has approximately 3,000 employees throughout the world and is listed on the KOSPI with a market capitalization of about 3.5 trillion won, making it one of the top 50 largest firms in South Korea. Recently, its investment banking arm has performed very well, and is currently the leading underwriter for IPOs.
Furthermore, after the privatization of KDB, significant amounts of potential synergy between the two companies is expected; the expertise and information network of Daewoo Securities combined with the extensive assets and M&A know-how of KDB will indisputably result in the first Korean bank that may be able to compete with global financial companies.
KDB was the first bank to introduce financial derivatives to Korea in 1988 and has continued to be a leader in the domestic market; it is the only local house among the top 10 derivatives dealers in Korea. KDB's derivatives transaction volumes rose by 18% from 318 trillion won ($300 billion) in 2012 to 374 trillion won in 2013 and accounted for 6% of the total domestic market share, ranking number five among 46 competitors.
Having faithfully performed its public policy banking role for 55 years, Korea Development Bank (KDB) was re-shaped in Oct. 2009 as the KDB Financial Group, a corporate & investment banking specialist under a financial holdings company structure. The newly launched group will fulfill its new mission of pioneering the future financial industry of Korea.
The KDB Financial Group combines the competitive strengths of KDB's corporate banking, Daewoo Securities' investment banking, KDB Capital and KDB Asset Management. While aiming to successfully convert to a privatized financial entity, the Group will evolve as global CIB that represents Korea by strengthening its core competencies, creating synergies and tapping into the global market.
KDB Bank Europe Ltd. is a subsidiary in 100% ownership of the South Korean state bank–The Korea Development Bank. We are a Hungarian financial market player for already 28 years, offering wide range of commercial banking services to retail clients, SMEs and large enterprises. Furthermore, we manage significant cross-border financing activity from our central office in Budapest, available in the countries of Central and Eastern European region and beyond.