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Kim Jung-tae of Kookmin Bank: “Bank Presidents Shall Not Be Appointed by the Government”

Kim Jung-tae of Kookmin Bank: “Bank Presidents Shall Not Be Appointed by the Government”

Posted August. 29, 2004 21:55,   


“If the government consistently interferes, Kookmin Bank’s stockholders and the market will raise their voices and cry out.”

Kookmin Bank president Kim Jung-tae proclaimed this when on August 29, the Stocks and Futures Committee concluded that he would be subject to considerable disciplinary measures and that his reelection to bank president would in fact be difficult.

President Kim met with our journalists on this day at his orchard in Hwasung, Gyeonggi province and said, “The time when the government can elect a bank president is in the past” and that “even America’s international credit rating firm Standard & Poors (S&P) has expressed that the decision is ‘unconvincing.’”

Earlier, on August 25, the Stocks and Futures Committee decided that Kookmin Bank would receive heavy disciplinary measures related to the violation of accounting measures connected to the merger of Kookmin Bank and Kookmin Credit Card. President Kim’s punishment will be decided on September 9 when the Financial Supervisory Commission will hold a disciplinary discussion.

The following is from an interview with bank president Kim.

- Have you had any contact with the government related to the Stocks and Futures Committee’s decision?

“I have not had any communication at all. It is only a quarrel over an accounting method, something Americans would not have a problem with. The dispute is caused by the difference between Korean tax accounting and finance accounting.”

- Some people think that “the government wants a bank president who is more obedient.”

“The time when the government can elect a bank president is in the past. Will the government be able to do that? (If the government interferes unjustly,) Stockholders and the market will raise their voices and cry out.”

- Will foreign investors sell out and leave?

“Whether they will sell their shares or put some kind of pressure upon the government is their decision. However, the market will make its judgment about this situation. Recently, the S&P has expressed that this decision (related to the controversial accounting transactions) is ‘unconvincing.’”

- There is also talk about “Kookmin bank got on the wrong side of the government when LG Card Corporation was in crisis”

“When the LG Card Corporation was in a predicament, the top management of LG group should have shouldered the responsibilities. But instead, they shrank from it. In that situation we only questioned their methods as a bondholding bank. And also, in the end, we granted all of government’s requests.”

- How will you cope with the situation?

“There is nothing to say until September 9 when the Financial Supervisory Commission’s disciplinary discussion comes to a conclusion. I have also communicated to foreign stockholders and investors that ‘I have nothing to say at the moment’ because it could give incorrect information to stockholders and the market.”

- If the Stocks and Futures Committee decides to impose severe disciplinary measures, will you take legal steps?

“(Smiling) I don’t know what the employees at Kookmin Bank might have said, but there is not much to say or do at this point. I have lived by my principles all my life. In the end, it always seems to be the right way.”

- What do you think about the possible successor to your office?

“I have been concentrating on concluding this merger for over two years. The question of a successor has been brought up in the third year (this year). Although the appointment of the bank president is the board’s exclusive authority, I have my own thoughts. I believe a successor should have the same management philosophy as his predecessor. There are many examples of banks gone amiss because the two had different thoughts. The appointment of a successor is a decision that needs plenty of time for contemplation. Deciding on a successor with such little time for it is a rash move.”

- In the long run, what sort of bank will you make out of Kookmin Bank?

“We will focus on mortgage loans as the Housing & Commercial Bank has, and on retail financing as Kookmin Bank has until now. Our goal is to become Asia’s representative regional bank. We will also continue to invest in foreign banks. Indonesia’s BII Bank has a return of 70% in nine months since we invested last November. We are also considering investing in Thailand and Taiwan.”

Cheol-Yong Lee Seung-Jin Kim lcy@donga.com sarafina@donga.com