Gov¡¯t poised to OK integration of healthy banks with weak regional banks

The government is considering approving the integration of healthy banks with weak regional banks if they arrange such merger plans themselves and submit them to authorities. The government also plans to allow banks receiving public funds to appoint managers in their 40s.

This was among the proposals contained in a blueprint for restructuring the banking sector that was finalized Monday by economy-related ministers.

Participants in the meeting included Finance & Economy Minister Jin Nyum, Chief Presidential Economic Advisor Lee Ki-Ho and Financial Supervisory Commission Chairman Lee Keun-Young. The report is to be submitted to President Kim Dae-Jung on Tuesday.

Meanwhile, the ministers also decided to push for Seoul Bank¡¯s sale to a foreign buyer for a certain period of time but said if the efforts fail, they would place the bank under a holding company.

In a lecture to foreign correspondents held at the Federation of Korean Industries building in Yoido, central Seoul, Minister Jin made clear that banks would be unable to receive public funds unless they make thorough self-rescue plans.

He also said that the government would change the procedures for appointing chief executive officers (CEO) of state-owned enterprises and government affiliated organizations and give them more responsibility, authority and incentive. He cited as an example the case of Korea Telecom, which selected its CEO through open recruiting. The government plans to take necessary steps toward this end over the next month.

Minister Jin said that the Fair Trade Commission recently conducted an investigation on a self-rescue plan drawn up by Hyundai Engineering and Construction to see if it involved illegal insider trading but found no evidence of wrongdoing.

Lee Hoon dreamland@donga.com