KDB to Become a Holding Company

Korea Development Bank will be divided into Korea Development Holding Company, which will be turned into a private investment bank, and Korea Development Fund, which will handle financing business, in December.

The Korea Development Holding Company will be listed next year. The government will sell a 49 percent stake of the holding company by 2010, using the proceeds to support small firms, and sell the remaining 51 percent to private financial firms and pension funds by 2012, as it finalizes privatization of the holding company.

Financial Services Commission Chairman Jun Kwang-woo announced these measures at the FSC headquarters in southern Seoul, yesterday. He said, “The FSC will introduce bills to revise the Korean Industrial Banking Act and KDF Establishment Act, by the end of June.”

According to the FSC, the holding company will have four subsidiaries. Policy finance function of the KDB, stakes in restructured firms, including Hyundai Engineering & Construction, and stakes in state-owned corporations, such as Korea Electric Power Corporation, will be transferred to the Korea Development Fund.

Also, after being reinvested next January, a 49 percent stake of the holding company will be sold by 2010 and used to support smaller firms. By doing so, 13 trillion won out of KDB’s current equity capital amounting to 18 trillion won will be passed on to KDF.

The FSC recommended Min Yu-seong, director of Lehman Brothers Seoul Branch, as the next governor of KDB. FSC Chairman Jun said, “Min will use the title of “president,” instead of governor. He may hold the additional post of the chairman of the holding company.

larosa@donga.com