Restructuring involves inevitable financial consequences: KDB chief

Social disturbances and financial costs during restructuring are the inevitable price one has to pay in order to reform the economy and prevent further damages, according to the chief of South Korea’s largest state-run bank.

“During my past 2 1/2 years in office, I have felt the high level of distrust in our society,” said Lee Dong-gull, chairman of the Korea Development Bank, in a press conference.

“Many blame us for persecuting workers along the way but our unchanging goal is to resuscitate the (insolvent) businesses, not to make things harder for workers.”

KDB, as the largest creditor for a number of ailing companies, has wrapped up most of the key pending deals this year. The list includes the sale of shipbuilder Daewoo Shipbuilding & Marine Engineering to market leader Hyundai Heavy Industries and that of air carrier Asiana Airlines to builder Hyundai Development Co.

“Few are likely to comment when a financially distressed company makes losses amounting to 1 trillion won ($836 million), but many make a big fuss when the sale process involves 500 billion won in related costs,” Lee said.

Such irrational resistance discourages companies from making the timely decision for restructuring, according to Lee.

“In that note, I appreciate (former Kumho Group) Chairman Park Sam-koo’s decision to set aside his attachment as business founder and sell off Asiana Airlines,” Lee said.

The KDB chief also underlined that policy finance organizations should exercise more management autonomy in order to live up to the Moon Jae-in administration’s innovative growth initiative.

During a press conference held in October, marking his two years in office out of his three-year tenure, Lee called for the expansion of state-run banks, mentioning the potential merger with the Export-Import Bank of Korea for the sake of budget efficiency.

By Bae Hyun-jung (tellme@heraldcorp.com)