Hwang Ki-yeon, head of the Export-Import Bank of Korea, said the bank has no plan to sell its stake in Korea Aerospace Industries. He also said a recently commissioned consulting study on the space and aviation industries was not a step toward privatization. He stopped short, however, of ruling out a sale at some point in the future.
Hwang made the remarks on the 20th at a parliamentary audit by the National Assembly's Finance, Economy and Planning Committee, according to financial industry sources. Asked by Rep. Yoon Hu-duk of the Democratic Party of Korea about the reason for commissioning the study, Hwang said the bank "did not order the study on the premise of privatization or a sale," adding that "there is currently no plan to sell KAI."
The bank in August commissioned a 1.8 billion won ($1.3 million) consulting project on strengthening the competitiveness of the space and aviation industries. That same month, Hanwha Group raised its stake in KAI to 15.89%, becoming the second-largest shareholder behind the Export-Import Bank, which holds 26.41%. The timing prompted questions over whether the study was groundwork for a stake sale or a governance overhaul.
Rep. Kang Min-kuk of the People Power Party also pointed to the overlap between Hanwha's stake increase and the bank's decision to commission the study. Hwang responded that he "was not aware that Hanwha was buying KAI shares on the open market," and that "the scope of the study did not include disposal of the KAI stake." He said he had received no contact from the Presidential Office, the ruling party or other political quarters regarding a sale of KAI.
Explaining how the project came about, Hwang said the bank received the proposal after consulting with the Ministry of Finance and Economy following a public briefing in July on a development vision for advanced industries in the Yeongnam region. "The Export-Import Bank has client companies in the space industry, and we wanted to hear a range of views on what role a policy finance institution should play in the space and aviation sector," he said. On a possible sale, he added that it was "difficult to speak definitively about future plans."
The audit also took up the concentration of the bank's supply-chain stabilization fund among large companies. Rep. Jung Tae-ho of the Democratic Party of Korea said large companies accounted for 91% of the fund's disbursements through September this year. Hwang said the bank would "activate a supply-chain win-win program to expand support for small and mid-sized companies."
Support for Korea Zinc, which is pursuing construction of a smelter in Tennessee, was also discussed. After Rep. Kim Sang-hoon of the People Power Party called for active consideration of assistance, Hwang said the bank was "in discussions on the use of the supply-chain stabilization fund."