KDB Privatization to Be Completed by 2012
By Yoon Ja-young
Staff Reporter
The Korea Development Bank's (KDB) privatization will be completed by 2012 after being transformed into a holding company this year and being listed on the stock market next year.
It will sell its stake in Hynix and KEPCO to set up the Korea Development Fund (KDF), which will support small and medium-sized enterprises.
Financial Services Commission (FSC) Chairman Jeon Kwang-woo announced the KDB privatization plan, Monday, which aims at transforming the bank into a globally competitive investment bank (IB).
``We determined that the early announcement of the privatization plan is better to get rid of unnecessary uncertainties on the market,'' Jeon said.
The state-owned bank will be divided into a financial holding company and KDF in December.
The financial holding company will comprise the bank and its subsidiaries, Daewoo Securities, KDB Asset Management, and KDB Capital. Experts from IBs will be appointed as managers for a smooth privatization.
The holding company will be listed on the stock market next year. The 49 percent government stake in the holding company will be sold by 2010, and the privatization will be completed before the end of the President Lee Myung-bak administration, or 2012.
Jeon said the KDB Act would be revised to allow the bank to engage in the demand deposit and lending businesses like other commercial banks.
KDF will be set up with 5 trillion won in capital, comprising a 49 percent stake of the financial holding company and the KDB's stake in public enterprises. It will raise capital to around 15 to 20 trillion won by selling those shares, and continue bank's role of supporting small businesses and economic cooperation projects with North Korea.
The fund, however, will work in a market-friendly way. It will minimize direct support of small businesses, and instead will support private financial companies that lend money to small businesses, guaranteeing payback of up to 50 percent of the loan.
Jeon said the setup of the KDF doesn't contradict the free trade agreement (FTA) between Korea and the United States, as the fund will be doing what the KDB has already been doing in the public sector.
``KDB is open to mergers and acquisitions with other banks during privatization,'' Jeon said. The chairman added that the regulator will also continue with the privatization of Woori Finance and the Industrial Bank of Korea.