Procurement News Notice |
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| PNN | 2158 |
| Work Detail | Lee Jeung-hwan reads a movie script once a week and holds a series of meetings with his colleagues and film industry officials to decide whether to chip in for its production. At first glance, the 51-year-old man seems to be a typical investor at Chungmuro, the South Korean equivalent of Hollywood. But he is a banker who handles financing for filmmakers at South Korea's state-run Industrial Bank of Korea (IBK). Lee's Creative Content Financing Department is praised for having generated huge profits for the bank by investing in mega-hit movies over the past few years. "The first thing I check every morning is the audience numbers of movies and the number of theaters showing the movies that we've invested in," Lee said in a recent interview with Yonhap News Agency in his office filled with stacks of movie and drama scripts as well as DVDs and books. Lee, chief of the 13-member team, said his team frequently holds meetings to decide whether to chip in for the production of new movies. As seen in IBK's case, local banks are increasingly tapping into cultural content -- which has emerged as a promising source of growth in recent years -- as they have been struggling to find new growth drivers amid record-low rates and fiercer competition at home. Banks' investments in cultural products can provide much-needed help to the culture industry that has long been beset by a lack of funds at a time when South Korea is boosting the culture industry as a key growth engine for the future. K-pop and its broader Korean Wave have struck a chord with young people around the world in recent years, burnishing South Korea's image as a trendsetting country home to "Gangnam Style," South Korean rapper Psy's mega-hit song. Lee said he has been looking at three movie scripts since mid-July when he was named to lead the department handling creative content financing after a three-and-a-half year stint in Myanmar. Lee said if he and his team agree that a movie script is OK, his team gives the script to another group of IBK employees -- who have first-hand experience working in the film industry -- to seek their advice. The script then goes through several other processes before IBK makes a final decision on whether to invest in the movie. IBK directly invested 2.6 billion won (US$2.3 million) in "Operation Chromite," a 17 billion won movie that depicts the Incheon landing operation that turned the tide of the 1950-53 Korean War in favor of the U.S.-led U.N. forces. IBK's latest investment has paid off as the movie has drawn more than 6.8 million viewers, above the break-even point of 5 million. IBK Securities, the brokerage arm of IBK, has also set up a platform through which individual investors have crowd-funded 500 million won for "Operation Chromite," providing a rare chance for ordinary people to invest in a movie. IBK has so far provided financing worth 222.7 billion won to more than 100 local films, including "Operation Chromite." Its return on investments in movie and other cultural products stood at 15.7 percent as of the end of June, a good performance at a time when local banks are at pains to boost profits. South Korea's key rate stands at an all-time low of 1.25 percent. The average net interest margin of South Korea's four major local banks fell to a record low of 1.48 percent as of last year. Last year, filmmaker Kim Hak-soon visited an IBK branch office to try to get loans for his movie "Northern Limit Line." The visit later led to an investment of 3 billion won from IBK and its affiliate, IBK Capital, in the 8 billion won movie, giving a much-needed boost to Kim, who was suffering from a lack of funding. "If I had not received IBK assistance, I could have managed to make a film anyway, but not a blockbuster," Kim said. "Northern Limit Line," a story about the deadly naval skirmish between the two Koreas in 2002 near their tense maritime border in the Yellow Sea, drew more than 6 million viewers. Kim later sent a letter of appreciation to IBK CEO Kwon Seon-joo and gave her flowers in person to express his gratitude for her support. "I felt a sense of reward in that the movie has had a good influence on young people; not for its success," Kwon said in a recent interview with Yonhap, noting that some young soldiers inspired by the patriotic movie postponed their discharge last year when tensions spiked over North Korea's land-mine attack near the border that maimed two South Korean soldiers. Kwon is also upbeat as "Train to Busan" -- the first homegrown zombie blockbuster invested in by IBK -- has surpassed 10 million viewers, a key indicator for a mega jackpot for films in a country of 51 million people. "A film's success makes me feel very happy and I feel as if I became a director," Kwon said. Seven local films have attracted more than 10 million viewers since 2013. Among them, IBK invested in five movies, including "Train to Busan." Kwon attributed IBK's successful investments in movies to her predecessor Cho Jun-hee, who created the Creative Content Financing Department in 2012 in the first such move by a local bank. Still, IBK said not all of its investments in movies succeeded, though it did not provide details, citing a lengthy process to fully calculate the return on investment. Besides movies, IBK also invested in musicals, animations, mobile games and dramas. Suh Yong-gu, a professor of marketing at Sookmyung Women's University, said the movie industry has emerged as a profitable business as returns on investments in movies have gone up in recent years. "There is the perception that movies could offer a promising opportunity for investments amid slowing growth," Suh said. South Korea's two public financial institutions have also joined efforts to provide financial assistance to cash-strapped makers of cultural products. The Korea Credit Guarantee Fund said it extended 351.6 billion won in credit guarantees for makers of cultural products in the first six months of this year. It means that the fund will pay back loans to banks in case makers of cultural products fail to pay back their business loans. The Korea Technology Finance Corp. has also vowed to provide similar credit guarantees this year worth 300 billion won to firms that make cultural products, including online games, movies, musicals and animations. It plans to expand credit guarantees to 500 billion by 2020. In May, the state-run Korea Development Bank and public broadcaster KBS launched a 100 billion won fund to invest in South Korean cultural products such as television series, movies and games in the next five years. The move is meant to help produce competitive cultural products like "Descendants of the Sun," a mega-hit South Korean television drama aired by KBS earlier this year. The state-run Export-Import Bank of Korea -- which partly funded "Descendants of the Sun" -- has said in a report that the direct and indirect economic effects of the drama are estimated to hover above 1 trillion won. The Export-Import Bank of Korea has also said it will set up two funds worth 150 billion won to invest in companies that produce television dramas and entertainment programs as part of its efforts to boost exports of South Korea's cultural products. South Korea's exports of movies and other cultural content came to $5.7 billion last year, compared with $4.3 billion in 2011, according to government data. "The future lies in culture," Suh said. |
| Country | Korea South , Eastern Asia |
| Industry | Financial Services |
| Entry Date | 03 Sep 2016 |
| Source | http://english.yonhapnews.co.kr/news/2016/08/25/0200000000AEN20160825007500320.html |
