Two major policy lenders to cut costs by 70bn won

South Korea's two policy lenders said Monday they will reduce costs by about 70 billion won ($61.2 million) in the coming years as part of their ongoing restructuring.

The Korea Development Bank (KDB) and the Export-Import Bank of Korea (Eximbank) said they will cut jobs and wages to stay slim and regain financial health.

The KDB said it will slash the number of its employees by 10 percent to 2,874 by 2021 and cut the annual salaries of executives and operating costs.

The policy bank also said it will also reduce the number of its branches to 74 by the end of next year, down from 82 in 2015 while cutting senior posts. These measures, the KDB said, will cut 40 billion won in costs.

Also Monday, the Export-Import Bank of Korea, another policy lender, said it will be able to cut about 30 billion won in costs through job cuts and salary decreases.

The Eximbank said it will cut the number of its employees to

914 in 2021, compared with 962 in 2016. The bank also said it will sell off its official residences and cut operating costs.

These policy measures are part of ongoing attempts to overhaul some South Korean industries facing stiff competition amid lower demand.

The KDB also said it will ban its employees from getting jobs in companies with restructuring programs led by the state-run bank.

The Eximbank also said it will keep its employees from getting jobs in companies under restructuring programs.

In South Korea, some retired officials and those who have political connections have been appointed to lucrative executive positions after leaving their government posts, a practice condemned as "parachuting" by critics.

The KDB renewed its commitment to selling its stakes in 132 non-financial companies by next year. In June, KDB Chairman and Chief Executive Lee Dong-geol said the planned stake sale of the

132 companies will raise funds worth more than 2 trillion won.

The KDB said it will sharply reduce the ratio of bad debts to 2.5 percent in 2020 from 6.15 percent as of June this year. (Yonhap)