Korea’s financial regulator said Thursday it will complete the re-merger of the state-run Korea Development Bank with a policy lender by the end of this year, pushing ahead with the plan that overturns a decision by the previous administration.
The regulator also said it will establish a maritime financing guarantee agency within this year.
Last year, the newly inaugurated Park Geun-hye government unveiled a blueprint for reuniting KDB with the Korea Finance Corp., which was spun off in 2009 as part of the previous government‘s drive to privatize public institutions. The KoFC served as a policy lender catering to small and medium enterprises.
The Financial Services Commission said the merging process will be wrapped up before the end of this year and the consolidated KDB will begin operations in January.
A committee arranging the merger will be set up within May to coordinate relations between the institutions and work on ways to protect investors’ rights and bolster the KDB‘s role in supporting SMEs.
The KoFC’s overseas plant projects, including its foreign assets, will be transferred to the Export-Import Bank of Korea by November, the regulator said.
“It is a merger of government-owned organizations due to a change in the administrative policy,” said the FSC in a release.
“We will handle the process in a way that maximizes their functions and minimizes potential conflicts and confusion.”
A maritime financing guarantee agency, a collaboration between KDB and the Eximbank, in guaranteeing loans in building new ships and purchasing used vessels, will be established by the end of this year, the FSC said.
The agency is expected to raise 550 billion won ($535.5 million) worth of funds within the next five years, it added.
The Maritime Financing Center will start operations in September, the regulator said.
The KDB reintegration became an issue for the Park administration whose top priorities included bolstering policy lending. The president pledged during her campaign that she would support the financially vulnerable, including smaller firms.
Industry watchers say the incumbent government needs to maintain control over KDB and other state-run financial institutions in order to carry out such policies, rather than privatizing them. (Yonhap)
