SERI INTERVIEW: YUN Yong-Ro on Global Economic Crisis and the Role of IBK
Lee, Keon-Hyok, SERI Quarterly
economic crisis, Industrial Bank of Korea (IBK), SMEs, management, liquidity supplies, credit evaluation, privatization
SERI Quarterly's Lee Keon-Hyok interviewed I B K's Yu ? Yong-Ro to examine the crisis' impact on SMEs, IBK's role in assisting SMEs, IBK's future privatization plans, and more.
YUN Yong-Ro Is Chairman and President of the Industrial Bank of Korea. Prior to joining IBK, he was Vice Chairman at the Financial Supervisory Commission, a member of the standing committee at the Securities and Futures Commission, and worked at the Ministry of Strategy and Finance. He Is the author of a 1 997 book titled, Financial Reformation [In Korean]. He holds an MA in Political Science from the University of Minnesota.
SQ You have talked with a lot of CEOs of smalland medium-sized enterprises (SMEs) as president of IBK. How are they coping with the global financial crisis?
MR. YUN Understandably, SMEs are not happy with the current situation. And the IBK is doing its best to help in these difficult times. For example, we have held twenty-five Town Meetings since the first one held in Gwangju, Gyeonggi Province in March 2008. The meetings provide an important means of hearing directly the views of SMEs in an informal setting. Such direct communication allows us to provide solutions that address the real concerns and problems of SMEs. These meetings used to be held by region, but we began arranging them this year by sector and theme to get a more accurate handle on what is troubling the SMEs. Based on the findings from these meetings, the IBK has taken over thirty important measures, including interest rate cuts on loans to SMEs, easing of lending criteria, and support for inheritances of family businesses.
SQ Amid the heightened global and domestic economic uncertainty, you have said that you are keeping the worst-case scenario in mind and that you are pursuing conservative management. Could you tell us what you mean?
MR. YUN Conservative management means that management and employees of IBK do not get overly optimistic about an economic recovery and that they remain in crisis mode. By maintaining this attitude and preparing for various scenarios that may still arise, we are able to deal with any situation that may come up in the second half of 2009. Even though some recent improvements in economic indicators and earnings signal a slight recovery in the real economy, caution must be exercised against premature optimism as many risk factors remain.
Accordingly, IBK will continue to maintain discipline and implement its "Visual Flight Rules" in the second half of the year. At the same time, we will help to raise the growth potential of the Korean economy especially by financing green investment and corporate facilities investment, even if it involves some risk.
SQ In your view, how long will it take to see a full-fledged recovery from the global financial crisis?
MR. yun ? think we can begin discussing a full- fledged economic recovery only in 2010 or lat- er, when the private sector can take over from the government in driving economic growth. The recovery that we see now is the result of ex- traordinary fiscal and monetary policies that cannot be sustained. At the moment, the num- ber of employed people continues to drop in the private sector while public sector employment is rising. Also, consumption of durable goods such as automobiles is being bolstered by sub- sidies that are unlikely to be sustained in 2010. Private sector spending will find it difficult to gain momentum as both companies and indi- viduals need to deleverage, a situation that exists not just in Korea, but across the globe.
SQ You emphasized the need for SMEs implementing their own measures to overcome the crisis, as government actions to support SMEs, such as the Fast Track program and maturity extensions for SME loans will soon expire. What are some of the ways for SMEs to increase their ability to stand on their own? …