KDIC moves to sell troubled savings banks

Sets May 18 deadline for bids to manage sale of suspended banks


The state-run Korea Deposit Insurance Corp. has begun the procedure to sell off four suspended savings banks ― Solomon, Mirae, Korea and Hanju.

The KDIC announced Wednesday on its website that it will receive bids from select companies to manage the sale and provide legal advice.

The requests for proposals should be submitted to the KDIC headquarters in Seoul by 5 p.m. on May 18.

The selected sale manager and legal consultancy will have to provide the same scope of service for the same commissions should affiliates of the savings banks be suspended, the KDIC said.

Financial companies affiliated with the sale manager cannot make bids to acquire any of the four suspended savings banks.

Kim Seok-dong, chairman of the Financial Services Commission, reportedly said on Wednesday that the government will take steps to downgrade the savings banks to mutual savings and finance companies after their restructuring is completed.

Mutual savings and finance companies changed their names to mutual savings banks in 2002 under the Kim Dae-jung administration after many of the small, community-based lenders went bankrupt during the 1997-98 financial crisis and the remaining ones grew bigger through mergers and acquisitions.

The FSC said in a statement that it was not considering a downgrade at the moment.

The FSC suspended the operation of the four secondary lenders on Sunday as they failed to meet the capital adequacy ratios recommended by the Bank for International Settlements standards.

State investigators are looking into alleged embezzlement, accounting fraud and the issuance of illegal loans at the savings banks.

By Kim So-hyun (sophie@heraldcorp.com)