...Government-Owned Key Policy Lender: The equalisation of Korea Development Bank's (KDB) Issuer Default Ratings (IDRs) with those of the Korea sovereign (AA-/Stable) reflects the bank's key policy role as a lender. It also reflects the full ownership by the government, which has a legal obligation to absorb the bank's losses should the bank's reserve be depleted. The bank's role in promoting development of local industry and infrastructure, and leading corporate restructuring takes priority over profitability. Contribution to System Stability: Fitch Ratings expects KDB's key policy role as a countercyclical lender to remain intact. The bank has contributed significantly to Korean banking system's stability over the past decade by leading restructuring in troubled industrial sectors, including construction, shipbuilding and shipping. This has allowed local commercial banks to cut losses by offloading their exposures to KDB and the Export-Import Bank of Korea (AA-/Stable), facilitated by capital...
