By Park Hyong-ki
An initial public offering (IPO) of the state-run Korea Development Bank (KDB) has been considered since the 2008-13 Lee Myung-bak administration.
As part of Lee's drive for the privatization of state assets and enterprises, the IPO was then viewed as essential.
Former governments saw it as a key step to make local financial companies globally competitive.
Then and now, the subject of a KDB IPO has emerged again ― is it necessary while the KDB has not really lived up to its role as a policy bank?
In a National Assembly audit of the bank, lawmakers have questioned the feasibility of its stock listing.
They asked whether it will do any good to reshape and refurbish the bank that has faced a series of investment losses and corporate and political scandals.
KDB CEO Lee Dong-gull said both yes and no.
He said the IPO would certainly help boost the governance and transparency of the policy bank, and remove the influence of politics.
"The positive aspect is it can improve transparency and keep political intervention in check," Lee said.
However, he added the bank should be cautious about listing because it could also bring negative effects including getting caught up only with short-term results.
"If the bank pursues an IPO, it may not fully carry out its policy financing as it could focus mostly on achieving short-term results."
The state policy bank has been implicated in a number of scandals involving the 2013-17 Park Geun-hye administration and Daewoo Shipbuilding & Marine Engineering (DSME).
The KDB was "politically pressured" to provide a lifeline to the debt-ridden DSME, which was charged with accounting fraud.
Some analysts call for a role change for the KDB.
Instead of continuing to provide capital to aging industries such as shipbuilding and petrochemicals that have been overtaken by China, it should redefine itself as a policy bank that can develop new industries for future growth.
Byeon Yang-kyoon, a former secretary for policy planning during the 2003-08 Roh Moo-hyun administration, suggested in his recent book that the KDB should be "a bank for startups."
The KDB was originally founded to help finance the growth of new industries that would create jobs and spur economic development.
However, it has been criticized for not carrying out its duties, but only trying to save dying industries and concentrating on conglomerates.
Lee was appointed the new chief executive of the state-run KDB early last month.
He previously worked with former President Roh Moo-hyun. He also went to the same high school as Jang Ha-sung, presidential chief of staff for policy.
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| KDB CEO Lee Dong-gull / Yonhap |
As part of Lee's drive for the privatization of state assets and enterprises, the IPO was then viewed as essential.
Former governments saw it as a key step to make local financial companies globally competitive.
Then and now, the subject of a KDB IPO has emerged again ― is it necessary while the KDB has not really lived up to its role as a policy bank?
In a National Assembly audit of the bank, lawmakers have questioned the feasibility of its stock listing.
They asked whether it will do any good to reshape and refurbish the bank that has faced a series of investment losses and corporate and political scandals.
KDB CEO Lee Dong-gull said both yes and no.
He said the IPO would certainly help boost the governance and transparency of the policy bank, and remove the influence of politics.
"The positive aspect is it can improve transparency and keep political intervention in check," Lee said.
However, he added the bank should be cautious about listing because it could also bring negative effects including getting caught up only with short-term results.
"If the bank pursues an IPO, it may not fully carry out its policy financing as it could focus mostly on achieving short-term results."
The state policy bank has been implicated in a number of scandals involving the 2013-17 Park Geun-hye administration and Daewoo Shipbuilding & Marine Engineering (DSME).
The KDB was "politically pressured" to provide a lifeline to the debt-ridden DSME, which was charged with accounting fraud.
Some analysts call for a role change for the KDB.
Instead of continuing to provide capital to aging industries such as shipbuilding and petrochemicals that have been overtaken by China, it should redefine itself as a policy bank that can develop new industries for future growth.
Byeon Yang-kyoon, a former secretary for policy planning during the 2003-08 Roh Moo-hyun administration, suggested in his recent book that the KDB should be "a bank for startups."
The KDB was originally founded to help finance the growth of new industries that would create jobs and spur economic development.
However, it has been criticized for not carrying out its duties, but only trying to save dying industries and concentrating on conglomerates.
Lee was appointed the new chief executive of the state-run KDB early last month.
He previously worked with former President Roh Moo-hyun. He also went to the same high school as Jang Ha-sung, presidential chief of staff for policy.
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