Kim Jung Tae is South Korea's star financial engineer. Through his dealmaking, he is reshaping the country's banking industry, prompting what may be a wave of mergers by retail banks scrambling for heft and reach. They are all following the lead set by Kookmin Bank--the Asia superbank created when Kim, now president, negotiated its merger with the rival bank he was running until last November, H&CB.
Kookmin now is Korea's largest and most profitable bank. It boasts 1,125 branches and $159 billion in assets and is expected to earn net profits of nearly $2 billion this year. That makes Kookmin a symbol of the restored financial circulatory system that sets Korea's dynamic economy apart from lumbering Japan's.
Kim's strategy is to use Kookmin's ties with Dutch banking giant ING to offer clients not just banking but also insurance, brokerage, and asset-management services at each branch. To keep up, banks such as Shinhan, Hana, and Koram are all now seeking partners, too. Some banks may not survive, but a shakeout could improve profitability.
Kim, 54, has long been considered a visionary financier. Just before the 1997 financial crisis, when others were expanding, Kim limited new branches at Dongwon Securities Co., the brokerage he ran. As a result, Dongwon remained profitable as rivals crashed. Four months after taking over H&CB in 1998, he slashed the bank's exposure to the soon-to-be-insolvent Daewoo Group. Kim was also first to cut off new credit to floundering Hynix Semiconductor.
Kim's goal is for Kookmin to match Western management standards. To help make that happen, he is giving senior managers one-year paid leaves to return to school. If he succeeds, Kim could give Korea's banking industry something it has always lacked: global respect.