By Jhoo Dong-chan
The nation's major banks are looking for possible opportunities in North Korea as relations between the two Koreas are thawing following their April 27 summit.
According to financial industry analysts, the Korea Export-Import Bank (Eximbank) has started refurbishing the insurance system for firms that want to enter the Gaeseong Industrial Complex (GIC) in a bid to prepare for a possible resumption of inter-Korean economic cooperation there.
The insurance system was introduced in 2004 to compensate for possible damage South Korean firms may have to sustain from any sudden shutdown. When the complex was shut down in 2016, the system covered 90 percent of the damage South Koreans firms endured after leaving production assets there.
“It could still be dangerous for firms to enter the complex without understanding all possible risks,” an Eximbank official said. “The insurance is a contingency measure for such unexpectedness.”
The Eximbank also said it is concentrating its efforts on operating a cooperation fund for inter-Korean cultural exchanges, including sporting events and separated family reunions as well as the June 15 Declaration joint event. The state-run bank is also hiring two experts on North Korea.
The R&D center of the state-run Korea Development Bank (KDB) also recently started studying the North Korean economy and possible costs for the two Koreas' unification.
The Industrial Bank of Korea (IBK) is also reviewing its plans to expand and reinforce related divisions to prepare for its entry into the country while pushing ahead with the potential opening of its branch in the GIC.
“We submitted our plan to open a branch in the complex in 2004, but failed,” an IBK official said.
“If the summit between the U.S. and North Korea concludes successfully and the complex is reopened to South Korea, we will once again seek to open a branch there.”
Major private banks have reportedly shown interest in possible infrastructure and economic development projects in North Korea.
Shinhan Bank, which has invested in various infrastructure projects here, is looking into similar opportunities in North Korea. It participated in building the Goseong coal-fired power plant in 2016 and the Songsan-Bongdam Highway project last year.
KB Kookmin and Woori Bank are also reviewing plans to invest in North Korea's infrastructure.
Woori Bank had a branch in the GIC in 2004 and had been providing services to 123 companies in the inter-Korean industrial zone with seven staffers staying there.
The bank said it will prepare for the branch's reopening.
NH Nonghyup, which had operated a branch at Mount Geumgang, will also reopen its branch there if the tour program restarts.