Fund Targets Advanced Industry Transformation and Regulatory Reform
Financial authorities and the five major financial holding companies have established a cooperative framework for the formation and investment of the 150 trillion won National Growth Fund, which will officially launch on Dec. 10. Financial Services Commission Chairman Lee Eok-won emphasized, “The National Growth Fund is a new path that industrial finance has never taken before in terms of scale, support methods, and cooperative systems,” adding that “financial companies must also drastically overhaul their existing mindset and business practices.”
Lee held a signboard unveiling ceremony of the National Growth Fund Secretariat at the Korea Development Bank in Yeouido, Seoul on Nov. 17, stating, “Through the National Growth Fund, we must change the flow of capital and bring about a great transformation in advanced industries,” and “please put all your will into the success of the productive finance transformation.” The ceremony was attended by KDB Chairman Park Sang-jin and all five major financial holding company chairmen from KB, Shinhan, Hana, Woori, and NH Nonghyup.
The Korea Development Bank and the five major financial holding companies signed a memorandum of understanding (MOU) to cooperate in the formation and execution of the National Growth Fund. The agreement includes provisions for the five major financial holding companies to actively cooperate in project-specific funding support while actively exchanging professional personnel and information related to advanced strategic industries. Accordingly, employees dispatched from each holding company are expected to join the National Growth Fund Secretariat, which is primarily composed of KDB employees.
Financial holding company chairmen also responded with active participation intentions. Shinhan Financial Group Chairman Jin Ok-dong said, “We are in the process of recruiting professional personnel with foresight to invest in advanced industries,” adding, “We will work hard to become a cornerstone for opening a new era through public-private cooperation.” Woori Financial Group Chairman Lim Jong-ryong requested, “The Korea Development Bank, which serves as the anchor role for the National Growth Fund, needs to establish an active cooperative system for corporate screening, selection, and credit management.” KB Financial Group Chairman Yang Jong-hee, Hana Financial Group Chairman Ham Young-joo, and NH Nonghyup Financial Group Chairman Lee Chan-woo also expressed their determination to do their best to contribute to the national economy.
The Financial Services Commission promised to boldly improve regulations that obstruct productive finance transformation. Chairman Lee stated, “Related ministries will collectively mobilize all capabilities for necessary policy efforts including regulations, fiscal policy, and taxation,” adding, “We will support active decision-making through risk-weighted asset (RWA) regulation rationalization and immunity support for investment failures.” Financial authorities are proceeding with the recommendation process for the Fund Management Review Committee composed of private experts while also establishing communication channels to reflect opinions from the financial and industrial sectors. The Korea Development Bank plans to receive and review individual National Growth Fund projects through its dedicated secretariat while also performing practical tasks such as arranging joint support from financial institutions.
However, Chairman Lee also delivered harsh criticism toward the financial sector, saying, “It is true that market and public evaluations are still cold.” This points out that while the five major holding companies each announced directions for supplying 73 to 93 trillion won worth of productive finance and revealed plans to participate in the National Growth Fund with 10 trillion won each, these are merely first steps. He urged, “They still view us as conducting massive interest-based business primarily focused on easy real estate collateral and evaluate that we are not playing a sufficient role in supporting future growth engines,” adding, “Please put all your will into the success of the National Growth Fund and productive finance transformation with a sense of responsibility for creating our economy’s future together.”