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| Korea Development Bank (KDB) Chairman Lee Dong-gull speaks during a press conference held at the KDB headquarters in Seoul, Tuesday, to mark the second anniversary of his inauguration. / Courtesy of KDB |
By Park Jae-hyuk
Korea Development Bank (KDB) Chairman Lee Dong-gull is facing growing criticism after proposing a merger of two government-run banks ― the KDB and the Export-Import Bank of Korea (Eximbank).
During a press conference held to celebrate the second anniversary of his inauguration, Lee told reporters that he would suggest to the government that it consider a merger of the two state lenders.
The chairman cited economies of scale as the reason for the structural reform of the state-run financial institutions, saying the merger would see fewer back office workers but a larger budget.
He also jokingly said the KDB originally owned the site for Eximbank, which is located just next to it.
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| The Export-Import Bank of Korea headquarters in Seoul / Yonhap |
His remarks stirred up controversy with the Eximbank strongly protesting the idea, regarding it as nonsense.
"It was inappropriate for a mere state-run institution chief to make such remarks," an Eximbank spokesman said. "We were embarrassed at his remarks, given that it is time to work together to counter Japan's export curbs."
The Eximbank's union also issued a press release a day after Lee's press conference, claiming that the former professor, who is regarded as being close to President Moon Jae-in, made the proposal to conceal his incompetence, taking advantage of a leadership vacuum at the Eximbank.
"In 2013, the government confirmed that the KDB was in charge of domestic policy financing, while the Eximbank was in charge of external policy financing," the union said in a statement. "Lee made irresponsible remarks, being unfaithful to his own duty."
Amid the growing controversy, the KDB said its chief simply expressed his individual opinion, which was not discussed with KDB executives or government officials.
The FSC which supervises the KDB, and the Ministry of Economy and Finance that oversees the Eximbank also said they were not considering what Lee suggested.
"The merger proposal is Lee's individual opinion," FSC Chairman Eun Sung-soo told reporters Monday. "I hope this does not cause additional controversy anymore."
However, this is not the first time that a merger of state-run financial institutions has come to the fore.
Former President Lee Myung-bak's transition team discussed a merger of the Korea Credit Guarantee Fund and the Korea Technology Finance Corporation.
In January 2015, the Korea Finance Corporation was integrated into the KDB.
The Korea Institute for the Future led by former Financial Supervisory Service Governor Kim Ki-sik also published a report in May 2018 to suggest the government consider setting up a holding firm having state lenders as subsidiaries.
Rep. Choi Woon-youl of the ruling Democratic Party and Rep. Chae Yi-bai of the minor opposition Bareunmirae Party supported Lee's proposal as well.
Economic experts, however, were skeptical about the merger.
"The KDB and Eximbank may seem to play similar roles, but they are actually quite different," Yonsei University economics professor Sung Tae-yoon said. "The KDB deals with a number of insolvent companies, so it is uncertain whether the merger could generate positive outcomes as Lee expects."





































