Banking & Finance Resource for North Korean Students & Professionals

Photo courtesy of the Korea Economic Institute. Compiled by Greg Levine Economist at a major global commercial and investment bank

The following is a resource guide on learning about the banking sector which we compiled for North Korean students studying overseas as well as for our in-country programs.

Issue of bank assets and asset management

The Bank for International Settlements has an excellent website for free research on developments in bank asset management. (http://www.bis.org/)

Some good papers of possible interest:

"Sound credit risk assessment and valuation for loans" (http://www.bis.org/publ/bcbs126.pdf)

"Supervisory guidance for assessing banks’ financial instrument fair value practices" (http://www.bis.org/publ/bcbs145.pdf)

The Euromoney website offers some good information on many of these topics as well. (http://www.euromoney.com/)

A summary "How to" guide on bank liquidity management.

(http://www.euromoney.com/images//502/77344/Liquiditymanagement_sept10_WEBFINAL.pdf)

The NY Federal Reserve has a very good website with dozens of topics related to banking, supervision, and asset management. (http://www.newyorkfed.org/index.html)

Their report on foreign exchange risk management might be good for banks with extensive foreign exchange exposure.

- "Management of Operational Risk in Foreign Exchange" (http://www.newyorkfed.org/fxc/2004/fxc041105b.pdf)

Issue and trade of stocks, asset investment, securitization, fundraising and management

Investopedia is a good investor site. They have good basic articles on trading stocks, characteristics of the market, and other assets. (http://www.investopedia.com/)

Their "investing basics" article has a good overview that links to many other articles: http://www.investopedia.com/articles/basics/

Types of bank loans, collaterals and guarantees

Very basic background on bank loan types. (http://www.ehow.com/about_4672890_types-bank-loans.html)

A short introduction on defining bank debt. (http://www.ehow.com/about_7237606_define-bank-debt.html)

[this topic can get complex, but the Federal Reserve site has some articles on this as well; let me know if you have any questions]

Law and regulations concerning bank management

The Federal Reserve publishes regulations on bank services based on U.S. law. This site is huge but can be useful if you have a detailed question in mind. (http://www.federalreserve.gov/bankinforeg/reglisting.htm)

Accounting principles concerning bank and its financial statement

Basic accounting information and overview can be found at a free online accounting textbook. (http://www.principlesofaccounting.com/chapter1/chapter1.html)

Issuing of banking cards and its settlement system

A good background on credit cards and settlement systems: (www.cardpaymentsolutions.com/docs/Bankcard_101.doc )

For more details on settlement systems and developments, you can reference the BIS website:

"Principles for financial market infrastructures - consultative report" (http://www.bis.org/publ/cpss94.htm)

Bonds trading on international financial market

Wikipedia has a good overview of the bond market here: (http://en.wikipedia.org/wiki/Bond_market)

For details, try Securities Industry and Financial Markets Association (SIFMA). The SIFMA site is excellent and provides data as well as reports and educational material. http://www.sifma.org/research/

Their page on bond markets might be very useful for you:

http://www.sifma.org/Education/Industry-Basics/Capital/Securities/

A few more sites you might be interested in ...

McKinsey & Co. offers an interesting background on Asia banking opportunities. Membership to the site is free, and they provide regular emailed reports on industries if you sign up for them.

https://www.mckinseyquarterly.com/PDFDownload.aspx?ar=2763&srid=17

Their recent article on "Asia's $1 trillion infrastructure opportunity" gives some basic infrastructure / financing principles along with some of the opportunities being looked at these days in Asia.

https://www.mckinseyquarterly.com/PDFDownload.aspx?ar=2765&srid=17

Expanding Our Singapore/SEA Based Team

We are keeping an eye on conducting future knowledge-exchange workshops in Singapore for selected North Korean institutions. With this in mind, we are expanding our current Singapore and Southeast Asia-based team of volunteers and advisors with a particular focus on expertise in fiscal and monetary policy, development strategy, banking, and country debt negotiations. We would like to welcome the following people to our regionally-based team and thank them for their valuable time and advice: Manu Bhaskaran Manu is principal and CEO in Centennial Asia Advisors, a strategic advisor on policy and corporate issues. Manu spent 20 years analyzing political and economic trends in Asia, first for the Singapore Ministry of Defense in the area of regional security and then for 12 years as Chief Economist and Chief Strategist for Asia of SG Investment Bank, the international investment banking arm of Societe Generale. He is a frequent speaker on Asian issues at major conferences such as the World Economic Forum. Although Mr Bhaskaran left service with the Singapore government in 1989, he has continued to participate in several governmental initiatives. He is also on the board of a listed Singapore government-owned company and is a Council Member of the Singapore Institute of International Affairs which advises the Singapore Foreign Ministry. He has also served as a Visiting Fellow at the Institute of Policy Studies, a Singapore think tank. Mr Bhaskaran has a MPA from the Kennedy School of Government at Harvard University and a B.A. in economics from Cambridge University.

Donald Low Donald Low established the Centre for Public Economics at the Civil Service College in Singapore in 2009 and served as its first director for two years. Prior to joining the college, he served in various capacities in the Singapore government. He was the Director of Fiscal Policy at the Ministry of Finance in 2004-2005 where he oversaw fiscal management, tax and budget issues, and the Director of the Strategic Policy Office in the Public Service Division in 2006-2007 where he led a number of inter-department project teams on cross-cutting issues affecting Singapore. He holds a double first in Politics, Philosophy and Economics from Oxford University, and a Masters in International Public Policy from Johns Hopkins University’s School of Advanced International Studies. He is also the editor of the upcoming book Behavioural Economics and Policy Design: Examples from Singapore, and serves as a Vice President in the Economics Society of Singapore.

Namuh Rhee Namuh Rhee is a Managing Director at Bank of America Merrill Lynch in Singapore. Prior to joining BOA-ML, he was a founding partner of Rhee Capital, an Asia-focused hedge fund, non-executive director and Member of the Board of Directors at Citibank Korea, Managing Director at Samsung Securities and Vice-President at JP Morgan. Namuh has an MBA from the University of Chicago Graduate School of Business and a B.A. in Economics from Seoul National University.

Tan Wee Cheng | Finance & Accounting | Currently an Adjunct Associate Professor at National University of Singapore, Wee Cheng was in past lives an investment banker, Central Bank regulator and ex-CFO of a Chinese Chemical Company. Wee Cheng brings with him a wealth of experience in making financial, policy and business decisions across a wide-range of business environments and contributes this knowledge to our programs. He has an MBA from the London Business School and a B.A. from the National University of Singapore.

Marco Breu | Finance & Banking | Marco Breu is the Managing Partner of a global management consultancy’s practice in Thailand and head of the practice’s Vietnam office. In his 10 years as a consultant, Marco has served over 30 different companies in 8 industries in over 20 countries in Asia, Europe, the Middle East, and North America. His main areas of expertise are banking, public sector, and infrastructure. Prior to joining the firm, Marco worked in the asset management industry. He is also a part-time lecturer at the National University of Management in Phnom Penh, Cambodia and the National University of Economics in Vientiane, Laos as well as one of the organizers of an entrepreneurship program for the Mekong region. He has a Masters Degree of Economics from the University of Berne, Switzerland.

North Korea: Australia’s capacity to act where others cannot

Choson Exchange recently prepared a program for North Korean students to learn business, finance and economics overseas through university courses and internships. They consulted a range of North Koreans on how it should structure such a program and ‘the Australia National University’ often came back as the model to follow. Up until 2006, ANU hosted North Korean trainees studying economics under programs supported by international and Australian aid agencies. The Australian exchange program was clearly well-regarded by outward-looking North Koreans. [Read More]

Knowledge Requests - Contract Negotiations, Microfinance & Bond Markets

We are looking to build our knowledge pool in the areas of contract negotiations, microfinance and bond markets as there have been requests for knowledge assistance in these areas from Pyongyang. We are told that North Korean firms need to negotiate more effectively with their Chinese counterparts, and require legal training to do so. The fundamentals of micro-finance and bond markets are also of interest to some financial organizations.

We expect initial programs for these areas to take place in April to May this year.

Helping Build a New Finance College

Kim Il Sung University, Pyongyang

North Korea established a new finance department at Kim Il Sung University last year. We worked with professors from this department during our workshop in September, and our workshop leader mentioned that there were very promising people among the group.

In line with our aims of promoting knowledge exchange in economics and business (especially in finance), we are exploring ways to work with Kim Il Sung University Finance College to develop intellectual capital. Aside from short-term guest lectures at the college, we are looking to set up a faculty development fund to bring professors out to overseas universities.

Pyongyang University of Foreign Studies was also looking into expanding their business classes and at setting up a management department. However, the professor in charge of the initiative has been replaced so we don't know what is the current status of this initiative.

Helping North Korean Students Share Learning with Technology

Some random brainstorming

We recently received emails from North Koreans asking for help in developing overseas study opportunities by setting up regular university exchanges. While the opportunity to go overseas is itself a valuable experience that can aid the professional development of young North Koreans, we believe the use of technology can help increase the learning value of these programs.

North Koreans have been very adept at using Gchat, Skype, Facebook, Gmail and other technology tools to communicate when abroad. North Koreans abroad need a support network able to empathize with their difficulties in adapting to foreign cultures. They also can benefit from tools that will allow them to share their learning and experiences with counterparts in other country. One way to do this is to use such communication technologies to allow North Korean students abroad to keep in touch with one another. This can be held in conjunction with in-Pyongyang pre-programs to help participants get to know each other before they depart for their separate destinations.

Jean-Jacques Grauhaur, Sec-Gen of the European Chamber of Commerce in Korea Joins CE as an Advisor

At the Grand People's Study Hall in Pyongyang

Jean-Jacques Grauhar, Secretary General of the European Union Chamber of Commerce in Korea, has been very helpful in advising Choson Exchange in an informal capacity and has agreed to come on board as an advisor to our organization.

Jean-Jacques brings with him extensive experience from his work supporting European companies in South Korea and previously in North Korea. He has spent 7 years working and living in Pyongyang, which allows him to share with CE his insights and understanding of North Korea's business and economics environment.

Jean-Jacques is especially interested in ways to promote and support business and economics understanding in North Korea in a non-political manner.

Jean-Jacques Grahaur's Bio

Jean-Jacques is the Secretary General of the European Union Chamber of Commerce in Korea (EUCCK) and co-President of the Europe-Korea Foundation(EKF). He has been living in Seoul for the last 15 years and was previously working in Pyongyang for 7 years as a business consultant. He is especially interested in supporting North Korea’s economic integration into the global economy.

For more on CE's advisors and lecturers.

6-Party Talks to Re-start - considering possible long-term impact on CE

The possibility of the six-party talks moving ahead looks more evident by the day, and the Yeonpyeongdo incident appear to have been at most a minor delay on this schedule. This is something the Obama and South Korean administration (for all the rhetoric) have been planning for for awhile, and informal discussions would have taken place, and will continue to take place as both sides feel each other out ahead of the talks. While agreements have fallen apart in the past and one has reason to be somewhat skeptical, I think some factors worth considering this round include (in no particular order of merit): Succession - With the likelihood of a full succession happening in North Korea in the near future, concerns about legacy brings opportunities and threats to any planned deal.

China's Influence - With the recent spate of economic "agreements" between China and North Korea (driven at the governmental-level), China is more influential in North Korea than ever.

Comprehensive Deal - While nuclear issues will dominate the talks, this round will likely feature greater discussion on issues such as economic development and human security (rights). If a significant aid for nukes agreement materialize, the US administration will want to encourage North Korea to adopt new economic policies to ensure its reintegration into the global economy.

US and South Korea - The US administration this round appears (on paper) to be more amenable to an agreement while the South Korean government, for all its reported hawkishness, seems somewhat pragmatic.

If an agreement is made and successfully executed by all parties, the economic environment in North Korea could change rapidly, which will enable and require us to think of new and innovative ways to tap our network to add value to the economic development process in North Korea.

2010: Reflecting on Progress for the Year

Australian Department of Foreign Affairs and Trade Secretary, Mr Dennis Richardson, present a plaque to the author of the winning Emerging Scholars article Geoffrey See (Photo: Darren Boyd, ANU College of Asia and the Pacific)

As the year comes to a close and we conduct our annual review, I would like to take some time to thank all supporters of our work. Projects in North Korea are never easy to support, execute or sustain but I feel that we have made some progress in this area. It is thankless work that is still much needed. And it is work made possible by the many supporters we have.

As 2011 approaches, we are planning exciting new programs building on our previous work and findings from on-the-ground interviews. We plan to build more linkages between streams of programs to increase our effectiveness, develop our overseas program component, and focus on targeting programs at specific institutions to raise the impact of our programs. We also have a strong pool of partner institutions and lecturers who can lead high-quality workshops in our target fields of business, economics and law.

For 2010, we are proud of our achievements both in North Korea and outside. We introduced OpenCourseWare into the higher education system, and held finance and economic strategy workshops for participants from Kim Il Sung University, the State Development Bank, Koryo Bank and Daesong Bank. We also disseminated materials on State-Owned Enterprises restructuring to interested partners. Externally, we began exploring a pilot internship program for young North Koreans which we want to use to gain feedback for a more structured program that is in the works.

We also presented non-proprietary information on our work to a selective audience in government, international organizations, academia and business in Australia, Singapore, the US, China, Sweden, Switzerland and South Korea (see picture above). Through these discussions, we have strengthened the network that underlays our model.

However, there is more that can be done and things that can be done better. We did not receive visas for some lecturers and we raised this issue with our North Korean partner. After reviewing the situation, we decided that we need work with various partners in order to choose those who can deliver. We have developed an operating model to do so, and will continue to test and refine this model. Technical barriers to staying in touch with those we met in Pyongyang is also an issue that we have started to address.

For 2011, we are now putting together our projected plans and materials for sponsorship. Funding is the most crucial missing link and we hope to focus more on this in the coming year.

Lessons from Introducing OpenCourseWare in North Korea

One of our aims is to introduce OpenCourseWare in North Korea. We presented the concept behind OpenCourseWare and demonstrated some course materials in Economics, Physics and Mathematics during a trip to Pyongyang this year. It was very warmly received with a senior Party member arranging for us to meet the dean of a university to explain the materials in greater details. What I found interesting about the process was:

1. The North Koreans we met were very interested when we mentioned the big-name American universities that contributed to OpenCourseWare. The people we met were aware of famous American universities and seemed interested in what they had to offer.

2. It was only after the high level party official expressed his interest in the OpenCourseWare materials that people were willing to ask more about the materials. Hierarchy obviously matters a lot and having a top-level person give his approval made others willing to act on introducing these materials into the system.