National Policy Banks and Financial Public Enterprises' Decision to Part with 7 Trillion KRW in Assets

Government Orders Public Institution Innovation: Selling Assets and Reducing Workforce
2 Trillion KRW from Policy Banks, 5 Trillion KRW from Financial Public Enterprises
Comprehensive Sales of Companies, Stores, Memberships
126 Employees Scheduled for Reduction

[Asia Economy Reporters Buaeri and Yoo Jehun] As the government embarks on tightening measures for public institutions, it has been estimated that policy banks and financial public enterprises plan to initiate asset sales and the restructuring of investee companies worth over 7 trillion won.

Asset Sales and Investee Company Restructuring by Policy Banks and Financial Public Enterprises Amounting to Approximately 7.7 Trillion Won

According to asset sale and workforce reduction plans submitted by each institution to Go Yong-jin, a member of the National Assembly's Planning and Finance Committee from the Democratic Party of Korea, policy banks will undertake asset sales and investee company restructuring worth about 2.3942 trillion won. Financial public enterprises will handle approximately 5.3141 trillion won.

Korea Development Bank (KDB) will actively proceed with the sale of Daewoo Construction, Daewoo Shipbuilding & Marine Engineering, Korea GM, KDB Life Insurance, Hwanyeong Steel Industry, among others. Daewoo Construction has already been sold to Joongheung Group for about 2.1 trillion won in the first half of this year, and Daewoo Shipbuilding & Marine Engineering is currently conducting sales negotiations with Hanwha Group as the preferred bidder. However, the sale prices for companies other than Daewoo Construction have not been determined. KDB has decided not to pursue separate asset sales, judging that additional asset sales are unnecessary as it holds only the minimum assets required to maintain operational functions.

Industrial Bank of Korea (IBK) plans to sequentially sell six branches from next year through 2027: Seoul Jangwi-dong Branch, Daegu Suseong Trump World Branch, Gyeonggi Suji Branch, Gyeonggi Seongnam IT Branch, Seoul Ssangmun Station Branch, and Seoul Suyu-dong Branch. The total sale proceeds are expected to be 35.7 billion won. Additionally, IBK will liquidate three investee companies from the second half of this year through 2025. The value of these investee companies was approximately 83.7 billion won as of the end of the first half of this year.

Export-Import Bank of Korea (KEXIM) plans to sell its office on the 21st floor of the Busan International Financial Center for 3.9 billion won by 2026 and recover 2.29 billion won by selling golf course and condo memberships as well as company vehicles by 2025. Furthermore, it will restructure investee companies such as Daehan Cable, Heung-A Shipping, and Seadrill, which have fulfilled their investment purposes, by 2024. The total estimated sale proceeds amount to about 168.59 billion won.

Among financial public enterprises, the Korea Credit Guarantee Fund plans to sell assets worth 611.6 billion won. It announced plans to sell the Gunsan Branch in the first half of next year (worth 3 billion won) and to sell its stake in the Namdaemun Branch in the second half of this year for 230 million won. Additionally, it plans to dispose of listed stocks and golf course memberships totaling 608.3 billion won from the second half of this year through the first half of 2024.

The Korea Deposit Insurance Corporation submitted a plan to the Ministry of Economy and Finance to restructure investee companies worth 4.6557 trillion won. KDIC plans to sell 93.85% of its shares in Seoul Guarantee Insurance (3.0463 trillion won), 5.8% of shares in Woori Financial Group (536.2 billion won), and preferred shares in the National Federation of Fisheries Cooperatives (818.3 billion won). It also announced plans to sell 10% of its shares in Hanwha Life Insurance (254.9 billion won) in the first half of 2024.

Korea Asset Management Corporation plans to dispose of real estate such as office buildings and company housing, as well as condo memberships, totaling 12.54 billion won, and aims to sell its holdings worth 34.15 billion won in Korea Asset Trust and MBC Chungbuk by the second half of 2024. Korea Housing Finance Corporation plans to dispose of assets worth 112 million won, including condo memberships and IT assets.

Financial Workforce Also Undergoes 'Diet'

While 6,735 employees will be reduced across 350 public institutions by next year, policy banks and financial public enterprises also plan to cut 126 employees.

Policy banks will reduce their workforce by 66 through downsizing non-core functions and improving organizational efficiency. IBK plans to reduce its official headcount (TO) by about 30 to align with actual working personnel. Through this, IBK aims to reduce its current headcount from 13,666 to 13,636. KEXIM plans to cut 22 employees by downsizing non-core functions and an additional 14 employees through local organization efficiency improvements and departmental restructuring. Consequently, KEXIM’s organization will change from 8 headquarters, 61 departments, and 104 teams to 8 headquarters, 58 departments, and 99 teams, with the headcount decreasing from 1,112 to 1,076, a reduction of 36 employees.

Members of the National Financial Industry Labor Union (Financial Labor Union) holding a general strike resolution rally on September 16 at Sejong-daero, Gwanghwamun, Seoul. At the time, the Financial Labor Union demanded the abolition of the public institution innovation plan.

Industrial Bank of Korea will not make separate headcount adjustments. Instead of reducing six support staff, it plans to reassign them as personnel supporting future strategic industries. The total headcount will remain unchanged at 3,406. Among financial public enterprises, the Korea Credit Guarantee Fund will reduce 54 employees, the Korea Deposit Insurance Corporation 5 employees, and the Korea Inclusive Finance Agency 1 employee, totaling 60 employees.

The Ministry of Economy and Finance finalized budget efficiency plans at the Public Institution Management Committee after reviewing innovation plans submitted by public institutions by the 8th of last month and conducting joint public-private 'Public Institution Innovation Task Force' inspections. Earlier, on the 17th, it disclosed plans to reduce current expenses of public institutions by over 1 trillion won and welfare measures, and it will sequentially announce innovation plans in the remaining three areas: assets, functions, and organization/workforce.

This content was produced with the assistance of AI translation services.