South Korea’s state-run Korea Development Bank has reinforced ties with its German counterpart KfW Bank, seeking inspiration from the latter’s experience financing Germany’s reunification.

The two banks held a joint workshop at the KfW headquarters in Frankfurt on Wednesday to discuss the roles and challenges for development banks facing potential reunification, according to KDB officials.

The workshop, titled “Challenges for Promotional Banks in Domestic and International Financing,” was comprised of four sectors ― the on-lending mechanism, start-up and SME financing, project and export financing, and financing in developing countries.

On-lending, a policy financing system to provide the state’s policy funds to small businesses through intermediate organizations, was first developed by KfW and later adopted by KDB.

“Germany has moved beyond reunification and on to full integration,” said KDB Financial Group chairman Hong Ky-ttack. “Such know-how is something that KDB must learn at all costs in order to lead (South Korea’s) reunification financing.”

At the discussions, bank officials exchanged views on how the two banks could work together on the issue.

“KDB and KfW could cooperate in projects such as offering financial support for companies starting business in the Gaeseong Industrial Complex,” said Kim Sang-loh, vice president in charge of credit review division.

The complex is an inter-Korean factory park where South Korean firms employ North Korean workers.

KfW, or Kreditanstalt fur Wiederaufbau, was established in 1948 after World War II to help rebuild the country.

As Germany’s top development financing organization, it has spearheaded the country’s fast-paced industrial recovery in the late 20th century and implemented policy financing plans in East Germany following the 1990 German reunification.

Wednesday’s meeting was the first visible outcome for a memorandum of understanding the two banks signed earlier this year. Under it, they pledged to help lay the cornerstone in Korea-Germany financial partnership.

In a separate one-on-one meeting, Hong and his KfW counterpart Ulrich Schroder talked about the German bank’s corporate structure and goals, and about how KDB may benefit from its business expertise.

KDB also hoped to gain insight on running merged entities, as the local bank is wrapping up a merger with the Korea Finance Corporation. The corporation head Zhin Woong-seob also attended the meeting.

By Bae Hyun-jung (tellme@heraldcorp.com)