Korea Development Bank chief to extend chairmanship

19-Aug-2020 Intellasia | KoreaTimes | 6:02 AM Print This Post

Korea Development Bank (KDB) Chair Lee Dong-gull is likely to extend his term for another three years at a crucial juncture when he has to continue handling a series of pending issues ? such as the ongoing deadlock in Hyundai Development Company’s (HDC) planned acquisition of Asiana Airlines.

However, every time such a rumour has surfaced in recent months, Lee has repeatedly made it clear that he “has no interest” in serving another term and has been “under a lot of stress” while serving as chair at the state-run lender. His three-year term expires September 10.

But financial industry observers expect Lee to extend his leadership under the widespread view that no other experts can replace Lee in terms of handling major issues on corporate restructuring.

Even though his term finishes in three weeks, there have been no reports of possible candidates to take over his position. This also raises the likelihood of a term extension, as usually politicians and financial bureaucrats begin a tough competition to secure the post at the major state-controlled organisation ? and in most cases, possible candidates are discussed in the media a few months before the predecessor’s term expires.

“I will work my best until early September, and am not considering anything after then,” Lee said in an online press conference in June amid rumours over his term extension.

The occupant of the top position at the state-run lender is recommended by the chief of the Financial Services Commission (FSC) and is finally appointed by the President. FSC Chair Eun Sung-soo has also not ruled out the possibility of Lee serving a second term. In a recent meeting with reporters, Eun said “we still have time, so let’s wait and see.”

One crucial reason for retaining Lee is because it would be better the incumbent chair to continue dealing with the pending take over in the aviation industry, which has been hit hardest by the pandemic.

The current impasse in talks between HDC and Kumho Industrial, the largest shareholder of the nation’s second-largest airline, is particularly a most urgent task the KDB faces. As the main creditor of Asiana, Lee has exuded strong leadership by pressing HDC to close the deal as soon as possible.

Earlier this month, Lee stepped up criticism of HDC for dragging out the acquisition process, saying that it would have to take “all the blame and legal responsibility” for the possible breakup of the deal on Asiana.

It leaves a question mark over who will be able to display such charismatic leadership in the area of corporate restructuring.

As aviation is one of the key industries teetering on the verge of collapse due to the global COVID-19 shock, chances are the government will likely persuade Lee to continue to remain in office at least until the pandemic shock subsides and the operation of virus-hit industries is normalised.

This is a very rare move as only three other former KDB chairmen have served consecutive terms since the establishment of the lender in 1954, and Lee could be the first KDB chair to serve a second term since 2000.

Lee is also standing at the centre of normalising operations at Doosan Heavy Industries & Construction. The KDB is the main creditor of the crisis-ridden construction arm of Doosan Group.

Doosan Heavy received emergency funds worth 3.6 trillion won from KDB-led creditors. Doosan Group is carrying out a series of painstaking self-rescue measures to salvage the construction firm.

The group-wide restructuring plan is still underway, so any leadership change at the main creditor will likely bode ill for Doosan Group which has remained cooperative with requests from the bank.

SsangYong Motor is another company KDB and Lee are paying keen attention to, as the automaker is on the verge of collapse due to its failure to attract capital from investors.

In January this year, Lee met with Mahindra Managing director Pawan Goenka to discuss restructuring the cash-strapped carmaker. Mahindra is the biggest shareholder of SsangYong Motor.

But both sides failed to come to terms on providing financial support for the automaker. Mahindra urged the KDB to provide additional money for SsangYong, but Lee did not accept the call, saying the major shareholder needs to take more responsibility in salvaging the company.



Category: Korea

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