WASHINGTON, D.C., June 23, 1998 --- The International Finance Corporation has signed agreements to invest US$25 million in subordinated convertible bonds in Korea Long Term Credit Bank (KLB), one of the country’s largest specialized banking institutions. The investment will help KLB through Korea’s current economic crisis. IFC will consider more substantial investments in the future in tandem with an overseas banking group, which would be a strategic partner for KLB.
The agreements were signed in Seoul by Mr. Jemal-ud-din Kassum, IFC’s Vice President, Investment Operations and Mr. Sei Jong Oh, President and CEO of KLB.
IFC’s investment in KLB will help the bank strengthen its capital base, refocus its activities, and develop into a more diversified financial institution. The Corporation will also provide technical assistance to enhance KLB’s risk management capabilities and train staff in specific areas.
Mr. Kassum noted IFC’s significant institutional strengthening and catalytic role in this project and said it would help to reorient KLB into a more broad-based institution. The project would also promote a model that could be followed by other Korean banks, send a strong signal to the market, and help to rebuild confidence in Korea’s economy and financial institutions, he said.
KLB, which is Korea’s only private sector development finance institution, focuses on corporate lending and long-term financing, primarily to private sector companies. IFC helped to establish KLB in 1967 and has been a shareholder since then. In the past, KLB has been a sponsor and technical partner in IFC-supported joint venture projects within Korea and overseas.
IFC has not been active in Korea for the last ten years. The current financial crisis has created a new role for the Corporation, which is now actively re-engaging in Korea.
IFC’s new strategy is to assist in the restructuring of Korean corporations and financial institutions to aid the recovery of these institutions as well as the economy. IFC’s activities are a key element of the effort by the multilateral financial institutions to assist Korea in tiding over the present crisis and bringing about meaningful changes in the banking sector.
IFC, part of the World Bank Group, fosters economic growth in the developing world by financing private sector investments, mobilizing capital in the international financial markets, and providing technical assistance and advice to governments and businesses.
