The distressed savings bank industry is expected to face another round of business suspension for some players, as the overall secondary banking sector saw its financial status worsen last year.
According to the Financial Supervisory Service, four of the 16 savings banks that publicized their 2012 financial statements declared “entire” capital erosion.
The four banks in complete capital impairment, whose equity levels fell below zero under heavy losses, were Hyundai Swiss, Shilla, Youngnam and Woongjin Seoul.
Financial regulators ― the FSS and the Financial Services Commission ― halted operations of Woongjin Seoul Savings Bank, a financial subsidiary of Woongjin Group, and Youngnam Savings Bank last Friday.
Shilla Savings Bank has been excluded from the suspension list as the court granted an injunction filed by the debt-saddled bank, while regulators had sought to halt its business.
Hyundai Swiss Savings Bank could also avert suspension as it has notified regulators of its plan to hand over a majority stake to Japan-based SBI Group.
The list of 16 troubled players also includes six savings banks, which held a relatively high possibility of impairment of their entire capital.
Hyundai Savings Bank, a unit of Hyundai Group, reported a capital erosion ratio of 92 percent.
Haesol Savings (formerly Busan Savings) is also in a risky financial standing with the ratio of 82.5 percent. Hanul Savings posted 79.3 percent, followed by Shinmin Savings with 77.7 percent, Changup Savings with 77.5 percent and Golden Bridge Savings with 73.2 percent.
Further, Shinmin Savings is scheduled to be delisted from the secondary KOSDAQ market on Feb. 27.
Companies with the capital erosion ratio of more than 50 percent have been classified as those in risky financial status.
The 16 players suffered a collective deficit of 15.8 billion won ($14.6 million) during the second half of 2012, while they posted a surplus of 260 million won over the same period of 2011.
In particular, six savings banks ― Hyundai Swiss 2, Shilla, Shinmin, Youngnam, Woongjin Seoul and Haesol ― posted a deficit in the second half of 2011 as well.
Meanwhile, since last year the prosecution has been investigating four players including Solomon Savings for alleged embezzlement or breach of duties.
Regulatory officials are also set to take stern action against major shareholders of savings banks for illegal lending and excessive risk taking.
“To protect the rights of savings banks’ customers, the regulatory body will also enhance sanctions against businesses committing false or delayed stock disclosures,” an FSS official said.
By Kim Yon-se (
kys@heraldcorp.com)
