South Korea plans to sell state-owned Korea Development Bank (KDB) by 2012 through share sales and private sales, said the South Korea's Financial Services Commission (FSC) on Monday.
According to the FSC, the South Korean government plans to put the lender and its three affiliates including Daewoo Securities Co. under a holding company, and establish a policy financing agency, tentatively named the Korea Development Fund, in December 2008. From next year, the government will seek an initial public offering and by 2010 it aims to sell 49 percent of the holding company. The remaining shares will be sold by 2012, the financial watch dog added.
"South Korea will privatize KDB as part of its efforts to transform the country's financial industry into a new engine of growth. The KDB sale is also part of the government's drive to nurture a global investment bank with competitiveness," the FSC said in a statement.
The privatization plan follows the current President Lee Myung-bak government's intention of boosting competitiveness in the financial sector by seeking ways to sell state-run financial companies including KDB and Woori Finance Holdings Co., the FSC added.
"To develop a KDB holding company into a global player, South Korea will push to diversify the group's business portfolios and seek overseas expansion and takeovers at home and abroad," the FSC said.
The FSC said that during the process of the privatization, it is possible for KDB to merge or acquire other state-run financial companies.
"There will be a level playing field for domestic and foreign investors (in the process of the KDB privatization)," Rhee Chang-yong, vice president of FSC, told a press conference. "It is expected that about 2 trillion won (1.95 billion U.S. dollars) a year will flow into the fund through the unloading of a 49 percent stake by 2010."
Meanwhile, the FSC said the government will guarantee payments of overseas debts worth about 21.1 billion dollars issued by the lender, in an effort to prevent foreign investors from demanding early redemption due to the proposed sale of KDB.
Source: Xinhua
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