Prioritize bank reform

The government is preparing ways to reorganize the three government-run banks, namely, the Korea Development Bank, the Industrial Bank of Korea and the Export-Import Bank.
We have repeatedly argued for the reorganization of government-run banks. These institutions were founded during the so-called development era in order to allocate bank loans in accordance with state policies.
They have remained in place long after they have fulfilled their purpose, eating away at the market share owned by private financial companies. Certain figures were sent to these banks by the government as well. These malpractices must be corrected. In this respect, it is good that the government has taken the first step for doing the job.
The government plans to leave these bank’s departments for financial policies in place while other sectors that compete with private companies will be separated and privatized. Korea Development Bank’s investment banking department will be separated from the traditional policy department.
The former will be joined together with Daewoo Securities, the public bank’s sister company, in a bid to make it a large-sized investment company.
It is desirable to privatize the departments that compete with private companies. The question is until when the department for financial policies will remain as a state-run bank.
Because the administration has started a complicated and important task when its term is nearing its end, the feasibility of success is very low. It is very unlikely that a full-scale reorganization of state-run banks will be done under this administration.
Until the job is done, the practice of employing certain figures will persist and the banks will keep infringing on the private sector. The plan to separate the investment banking department and to make it a large company could be used as a way to create more positions and make the state-run bank even larger.
The government should make this project an important issue among the public and confirm concrete ways for reorganization. Once the principle of privatization is set, it should set a clear timeline so that the job is not delayed.
What’s most important is that the government must ignore government officials who want to have jobs at the banks or the banks’ demands that they remain a safe place where employees do not need to worry about being fired.