[FOUNTAIN]A star leaves office with mixed marks

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[FOUNTAIN]A star leaves office with mixed marks

In June, 1998, BusinessWeek magazine picked Kim Jung-tae, then president of Dongwon Securities, as one of the 50 stars to lead the way out of the Asian economic crisis. It was quite an extravagant debut for Mr. Kim, a relatively unknown securities specialist at the time. The reason for the honor was Dongwon Securities’ no-debt policy and his transparent management. Mr. Kim, who was appointed in May 1997, had paid off all of the firm’s 500 billion won in debt by the end of September. Because the economic climate was so murky, he thought it was risky to use borrowed money. A few months later, the Asian economic crisis hit the Korean economy hard, and many financial services companies went bankrupt. However, with no loans on its books, Dongwon Securities could grow into a leading company. His 1998 appointment as CEO of the Housing and Commercial Bank was a sensation in the financial industry. At age 51, he was the youngest bank head in the nation, and he was the first securities company president to be appointed a bank head.
At the end of 1998, he caused big trouble. Housing and Commercial Bank, which earned 161 billion won in 1997, had a 450 billion won deficit the next year. The bank’s performance had not fallen, but Mr. Kim strictly applied accounting principles that met international standards. While he was criticized in the banking world, foreign investors welcomed the change and said they had finally found a company they could trust. They immediately began to buy Housing and Commercial Bank stock.
Mr. Kim has a deep respect for principles. He also tried to meet the demands of the market and shareholders, not the government or politicians. His stubbornness was often not welcomed, but it made him a star CEO in the market. He served at the bank with no salary ― only stock options ― and in 2002, he cashed in 10 billion won in those options. He kept his star power by donating half to the community.
On Oct. 29, Mr. Kim completed his term as the CEO of Kookmin Bank. Ironically, what pulled down the fundamentalist and champion of market economy was alleged accounting standard violations. He received mixed evaluations, but he was a star CEO who made positive changes in Korea’s financial industry.

by Lee Se-jung

The writer is an editorial writer for the JoongAng Ilbo.
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