Lee Dong-gull, chairman of the state-run Korea Development Bank, suggested Tuesday that the government should consider merging the country’s two policy finance institutions -- KDB and the Export-Import Bank of Korea -- for state budget efficiency.
“It is about time that we reshuffled the government’s policy finance functions so as to keep in step with the fast-changing market trends,” Lee said in a press briefing to mark two years in office in his three-year tenure.
“(As part of this direction), I will suggest to the government the plausibility of merging KDB and Eximbank in the near future.”
He added that it is yet premature to jump to conclusions and he is merely trying to lay the agenda on the table for further discussion and development.
KDB also released a statement, shortly after the briefing, that no internal discussions had been made on the possibility as the suggestion was entirely Lee’s personal opinion.
Korea Development Bank Chairman Lee Dong-gull. (KDB)
Should the state-run banks merge as suggested, the combined institution would have access to sufficient manpower and budget, especially in sectors requiring concentrated investment such as information technology, according to the KDB chief.
The merger scenario came as part of the KDB chairman’s efforts to secure sufficient funds for innovative growth and other government-driven initiatives.
“KDB’s main role for the past 50 years has been to shore up the nation’s industrialization. It now faces a watershed point where it has to figure out new growth engines for the next 50 years or more,” Lee said.
He also dismissed the ongoing rumors that KDB may be relocated to a non-metropolitan city as part of the government’s regional balance road map.
“This is the time when we should focus on globalization, so the provincial relocation issue is far-fetched,” he said, asking the media to refrain from speculations.
Concerning the impact of Japan’s export curbs, the policy bank’s chief called for fundamental approaches to renew the country’s industrial ecosystem.
“The recent struggles to localize key parts, materials and machines revealed the vulnerability of our industries,” Lee said. “KDB will look beyond short-term responsive measures and work on reinforcing the country’s industrial fundamentals in a long-term approach.”
When asked about the ongoing corporate restructuring issues -- especially the sale of financially burdened air carrier Asiana -- the KDB chief said he had little to comment.
“I have given orders to handle (the Asiana case) at the working level, without reporting everything to me,” he said.
As a creditor and state-run financial institution, (KDB) expects the most competent bidder to join Asiana’s corporate management.”
When it came to the ongoing union strike at carmaker GM Korea, however, Lee disappoved of the unionists’ noncooperative attitude.
“The strike may lead to negative consequences in this early stage of normalization,” he said.
“As a matter of fact, I find it difficult to see why those who already earn more than 100 million won ($84,000) per year should go as far as staging a strike just to have their pay raised by 10 percent or so.”
Late last year, creditor KDB decided to inject $750 million into GM Korea as part of its earlier rescue package for the distressed US-based carmaker.
“Unionists may have their complaints but should not be blinded by their short-sighted interests at this point in time where labor-management partnership is vital for the company’s survival.” he said.
“If GM Korea eventually decides to withdraw (from the Korean market), will (unionists) then come to us and hold KDB responsible?”
Under the latest strike, GM Korea was forced to reallocate part of its production capacity to Mexico, which could negatively impact its position in the long term, he added.
By Bae Hyun-jung (email@example.com)