IN the second year of his three-year term, Korea Development Bank chairman Lee Dong-gull has achieved one major milestone in 2019 with the signing of the Won2trn ($1.7bn) merger deal for Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering.

While not a done deal yet, this would have relieved him of one of his biggest headaches as the bank applied much of its efforts last year to helping out the maritime sector, a key element of the South Korean economy.

Securing regulatory approvals from various jurisdictions — the European Union prime among them — are some of the hurdles the deal still faces, in addition to opposition from workers’ unions.

Competitors in countries such as Japan also complain of heavy state subsidies in the sector that will be exacerbated by the merger.

However, Mr Lee already seems to be turning his attention to other important aspects of the economy to which the bank needs to attend, while simultaneously attempting to streamline the operations of South Korea’s two policy finance institutions.

Earlier this year, he suggested the government should consider merging KDB and the Export-Import Bank of Korea (Kexim) for state budget efficiency.

“It is about time that we reshuffled the government’s policy finance functions so as to keep in step with the fast-changing market trends,” Mr Lee was cited as saying in local media.

In doing so, the former business administration professor kept up his no-nonsense style and continued to show he will not shirk away from difficult decisions while remaining clearly focused on the task at hand: to rehabilitate South Korea’s troubled conglomerates.

He has been reported as saying the reason behind a possible merger of the two state-run banks would be to gain access to more manpower and budgetary resources to help develop the future growth engines of South Korea’s economy.

Mr Lee was quoted as saying that while KDB’s main role for the past 50 years has been to bolster industrialisation, new growth drivers must be found for the future.

This is as strong an indication as any that the shipyard and engineering sectors that have been much of KDB’s and Mr Lee’s focus in the past two years will now be left to fend for themselves, after being given a massive amount of assistance.

Indeed, in 2019, KDB has even spun off a separate private equity arm called KDB Investment to focus just on restructuring, turnarounds and distressed investments.

A potential merger of KDB and Kexim would be a further concern for South Korea’s shipbuilding industry if Mr Lee’s apparent shift in policy focus to high-tech and new economy segments plays out.

Kexim had been a tacit supporter of the maritime industry through providing financing for domestic shipowners to spend on building ships at local yards — a practice about which Japan has brought a complaint to the World Trade Organization.

In other parts of South Korea’s industrial complex, Mr Lee has shown a similarly tough and uncompromising attitude to that he showed to striking shipyard workers opposed to the HHI-DSME merger, suggesting a strike at distressed carmaker GM Korea “may lead to negative consequences in this early stage of normalisation”.

However, there may yet be a sting in the tail to this approach. DSME workers, who have long been opposed to the merger, have taken proactive steps.

As recently as October, they took their case directly to the European Union’s competition commission, seeking to scuttle the deal.

HHI formally submitted a request for approval of the merger in November.

The bank continues to do well financially under Mr Lee’s leadership, with net profit for 2018 rising 25% to Won706bn ($599.9m).

Mr Lee also appeared in the Top 100 in 2017 and 2018.