Kim Jung-tae 1947–

International Directory of Business Biographies, (2005) by David Petechuk

Kim Jung-tae 1947–

Chief executive officer and president, Kookmin Bank

Nationality: Korean.

Born: August 15, 1947, in South Chohlla, Korea.

Education: Seoul National University, BA, 1970; MBA, 1974.

Career: Cho Hung Bank, 1974–1976, research clerk; Daishin Securities Company, 1976–1982, eventually executive director; Dongwon Securities, 1982–1997, eventually vice president of Dongwon Venture Capital; 1997–1998, CEO; Housing & Commercial Bank, 1998–2001, CEO and president; Kookmin Bank, 2001–, CEO and president.

Address: Kookmin Bank, 9-1 2-ka, Namdaemun-ro, Chung-ku, Seoul, 100-703, South Korea; http://www.kookminbank.com.

■ Over the course of his career Kim Jung-tae became a legend in the Korean banking industry. As president of South Korea's Housing & Commercial Bank, which later became H&CB, he turned the company into the most profitable bank in South Korea and completed the biggest bank turnaround in the country's history. He also ushered in a new Western approach to banking, one that did not rely on government backing or old-school approaches to business. In the process Kim reshaped the entire industry and brought South Korea's banking system back to financial health. He helped create the country's first "super" bank, Kookmin Bank, with the merger of H&CB and Kookmin. He subsequently became the head of Kookmin and set out to further revolutionize the banking industry in South Korea. Analysts and colleagues noted that Kim's down-to-earth demeanor belied a tough banker who hired and rewarded employees based solely on performance and capabilities.

CATCHES PROFESSOR'S EYE

Kim's parents were South Korean rice farmers; he said that his father's insistence on honesty at all times taught him the value of sound economics over cronyism. Throughout his career Kim maintained a strong tie to his parents and continued to work on the family farm on weekends. He worked in the securities business for more than 20 years, eventually becoming executive director of Daishin Securities Company and later CEO of Dongwon Securities in the 1990s, where analysts noted he cut his business teeth. His refusal to borrow in order to promote growth paid off when an economic crisis hit South Korea's and most of the rest of Asia's financial and banking markets in 1997. Unsaddled with debt, Kim was able to ride out the storm; while other securities firms collapsed, Dongwon made it through the crisis relatively unscathed.

The Seoul National University professor Cho Dong Sung took note of Kim's record at Dongwon, eventually recommending him to the Housing & Commercial Bank's (H&CB) board, which was looking for a new leader outside of the traditional banking community. Analysts noted that Kim's profit-first approach was unique in Korean banking circles. In 1998 he was named president and CEO of H&CB; he had taken the first step on a meteoric ride through the banking business.

TURNS H&CB AROUND

H&CB was in trouble, largely because it had relied too heavily on its Korean monopoly in home-mortgage lending. The bank was privatized in 1996, and in 1997 the government opened the mortgage market to competition. When the 1997 crisis hit, the bank began to crumble primarily because of bad loans, and Kim was brought in to perform a rescue operation. He later said in Forbes , "I wanted to bring to the banking industry some of the factors that make the securities industry so dynamic, such as performance-based rewards and a demand for transparency" (September 18, 2000).

Kim set out to run a tight ship at H&CB, cutting staff by 25 percent; analysts credited him with quickly recognizing that H&CB simply had to take its medicine. He organized bad-loan write-offs of $304 million, with the bank losing $231 million in his first year as president and CEO.

Kim quickly turned H&CB into a model institution of Western-style banking. He established a strict credit-review system and cut another 5 percent of the workforce. Investors were impressed, and in 2000 H&CB made a record profit of $400 million. By early 2001 shares that had been trading below $3 when he took over had reached nearly $22. Kim's decision to take stock options over a salary paid off, earning him around $7 million in his first two years alone, compared to the average of $150,000 that Korean bank CEOs were typically paid at the time.

By 2001 Kim had turned H&CB into Korea's most profitable bank, with a return on equity of 22 percent. Industry analysts almost unanimously regarded H&CB as one of the best-managed companies in South Korea, and some expected the Korean government to ask him to become the country's Minister of Finance & Economy. Analysts noted that he effectively tapped into H&CB's junior and middle management, who had been largely ignored when the bank had functioned as a state-owned enterprise. He emphasized transparency in decision-making processes and in accounting and reporting. These efforts culminated in H&CB being listed on the New York Stock Exchange, with respect to which Asianmoney reported Kim as saying, "The NYSE's listing regulations are very stiff. That we were able to meet the exchange's requirements shows that our standards are at international levels" (May 2001).