Kim Jung-tae

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;

■ 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.


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.


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.

Although the bank initially struggled under his leadership, Kim was slowly instituting a well-formed plan. He hired foreigners—a relatively rare practice in Korean banking—and worked on instilling the bank's employees with Western business practices, bringing in a Western company to create an incentive pay system for employees and management. One of the most astonishing aspects of Kim's appointment at H&CB was his turning down a salary in favor of stock options, a move many analysts saw as extremely risky. (Officially his contract paid him a salary of about 12 Korean wons, or one cent a year.) Kim told Kevin Hamlin of Institutional Investor International Edition , "I could hardly accept a salary-based position and then preach performance-based pay to other bank employees" (August 1999).

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).


Although he had only been in the banking business for a few years, as soon as his forming of a merger between H&CB and Kookmin Bank occurred, analysts were calling it his crowning achievement. The two strongest banks in Korea signed a merger agreement on April 23, 2001, at which time many wondered why Kim would negotiate a merger putting his job as the head of H&CB at risk. Analysts noted that he could have easily been named second in command at the new bank, as the Kookmin president Kim Sang Hoon came from the larger organization. But Kim saw the opportunities presented by the merger as too great to pass up. As reported by Asianmoney , Kim explained that he organized the merger in order "to maximize shareholder value and to begin reforming the Korean financial system" (May 2001).

Regardless of who would head the company, the merger was seen as creating Korea's first consumer-banking giant, with more than 1,100 branches and 28 million accounts. In the end the board indeed chose Kim as president of the colossus, which began operating jointly as Kookmin Bank in November 2001. Analysts quickly noted that H&CB employees would not receive preferential treatment from the victorious Kim, who quickly looked into corporate-office and branch job cuts. Kim told John Larkin of Far Eastern Economic Review , "Past mergers suffered because everything had to be split 50-50. I will erase those old legacies. Which bank, which region, which school you're from is not important. Capabilities and performance are the most important things" (August 23, 2001).

Kim took the new challenge, which wouldn't be easy, head on. Analysts noted that he had to consolidate 1,125 overlapping branches and thin a staff of 23,000 employees, most of whom had been against the merger. Kim almost immediately faced trouble from Kookmin's aggressive union, which sought a court injunction to have his appointment overturned. The would-be chief executive had in fact appeared at the union's office unannounced, challenging the unionists to boost profits and shareholder value. BusinessWeek noted that Kim told the union leaders, "Speak up now if my plan is wrong. I'll listen to you, but your ideas better be good for the bank" (April 8, 2002).

Kim took control of Kookmin and quickly turned it into a model for all Asian banks. He cut off delinquent customers and sped up integration of the banks' information and technology systems. He also held managers to tougher standards, reshuffling senior managers based on their performance over the first four months of the merger. Just five months after taking over, Kookmin reported a 24 percent jump in profits, to $2.8 billion, over the combined Kookmin-H&CB total in 2000.

By the fall of 2002 analysts called Kookmin Korea's most progressive financial institution. Kim had instilled his vision throughout the company, whose avowed mission was to lead South Korea into a new financial era. Kim envisioned a banking system that did not cave in to business or government demands to make more money available whenever a big company was in trouble. Nevertheless, some analysts did not see the bank's future as entirely rosy. They noted that Kookmin was primarily a retail bank and that the South Korean economy was cooling in terms of consumer spending; Kookmin was at risk because it had feasted on the voracious borrowing of consumers. In fact, analysts' concerns about Kookmin's problems with the possibly tapped-out local consumer market led to a 35 percent decline in Kookmin shares over the course of 2002—far worse than that year's 5 percent overall drop in the Korean Stock Exchange.

The analysts appeared to have been right when in October 2003 Kookmin announced a net loss of $287.45 million for the quarter that had just ended. Kim and the bank attributed the deficit to the provision of additional loan-loss reserves that resulted from the merger with its subsidiary Kookmin Credit Card Company in September. By early 2004 Kim announced that the bank was at war with worsening business conditions. According to AsiaPulse News , Kim noted at a monthly staff meeting, "Kookmin Bank has no choice but to go into emergency mode to overcome unfavorable market conditions" (March 2, 2004).

Kim noted that the prolonged slump in private consumption and Citigroup's advance into the domestic banking market were making business conditions difficult. Nevertheless Kim and Kookmin announced shortly afterward that the bank saw a net profit of $145.85 million in the first quarter of 2004, up 311.4 percent from the year before. Operating profits before the setting aside of loan-loss provisions also increased during the three-month period.


Analysts noted that Kim was an early proponent of attending Western business seminars and made his reputation as a leader who was not afraid to try a different course by pushing new ideas. He particularly hated the bloated management hierarchies that typified many Korean financial and banking companies, which were often either owned outright by or maintained close ties with the government.

According to Donald Kirk of Institutional Investor International Edition , Kim modeled himself after "two titans of the U.S. corporate scene: the former chiefs of General Electric and Intel Corporation, Jack Welch and Andy Grove" (November 2002). Specifically Kim admired their audacious management style, boldness, and vision. Industry analysts noted that Kim was blunt, decisive, and aggressive in his own management style, which he topped with an uncanny sense of timing that—for the most part—helped him avoid the sorts of financial crises that plagued other Korean financial institutions. Kim was known for his ability to delegate power to his juniors. Above all, as one former aide pointed out to Kirk in Institutional Investor International Edition , "He not only worked hard, he studied hard" (November 2002).

More than anything else, Kim's insistent adherence to Western banking and accounting principles made him stand out from the South Korean banking crowd. Some analysts believed that his initial status as an outsider helped him to see what was wrong with Korea's banking system and focus on the areas that needed fixing. The overall management philosophy that he preached was to maximize shareholder value through transparency of operations, customer service, and performance-based awards. In the area of risk management Kim was credited with bringing about a banking-culture change by holding credit officers accountable for their decisions, with their entire careers dependent on their performances. His companywide institution of performance-based reward systems was the first such action in a Korean bank.


Despite occasional setbacks Kim maintained his reputation as a visionary South Korean financier. He continued to advance his global vision for Kookmin to become a world-class retail bank delivering impeccable services. Kim stated that his ultimate goal was to make Kookmin Bank one of the top 30 banks in the world.

See also entry on Kookmin Bank in International Directory of Company Histories .

sources for further information

"The Bank That's Rewriting All the Rules," BusinessWeek , April 8, 2002, p. 36.

Hamlin, Kevin, "Asia's Most Influential Banker, Institutional Investor International Edition , August 1999, p. 41.

"Jung Tae Kim Creates a Korean Bank That Can Say No," Asianmoney , May 2001, p. 34.

Kirk, Donald, "Riding Korea's Big Tiger," Institutional Investor International Edition , November 2002, p. 62.

"Kookmin Bank President Rallies Staff to Face Market Challenges," AsiaPulse News , March 2, 2004.

"Korea's King of Options," Forbes , September 18, 2000, .

Larkin, John, "Punching Above His Weight," Far Eastern Economic Review , August 23, 2001, p. 44.

—David Petechuk

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