Management of KDB
According to government sources, the Ministry of Strategy & Finance of South Korea is likely to designate the Korea Development Bank (KDB), which is currently a public institution, as a state-owned company in January next year. In South Korea, public agencies are divided into state-owned companies, quasi-government agencies and public institutions and the third has the highest level of autonomy and is subject to the lowest level of supervision.
The designation is to keep a closer eye on the KDB with the bank’s poor management and supervision of Daewoo Shipbuilding & Marine Engineering having led to a severe crisis in the shipbuilding industry. At present, it is the Financial Services Commission that is in charge of the supervision of the KDB with regard to budget planning, employment management, business planning, management assessment, etc. After the designation, however, the right is transferred to the ministry and it becomes responsible for every major decision to be made in the bank.
Some people are pointing out that the designation will result in the weakening of the KDB’s corporate restructuring and venture investment functions, two of its major roles. “Once the KDB becomes a state-owned company, its assistance in corporate restructuring can be regarded as a government support by other countries and then disputes may arise with regard to WTO subsidy regulations,” one of them remarked, adding, “The ministry’s purpose is innovation, but it can backfire in view of the original role of the KDB.”