State-controlled Korea Deposit Insurance Corp. is facing a lawsuit from consumers who suffered losses on locked deposits in the wake of the 2011-12 savings bank debacle, industry sources said Thursday.
Many customers were unable to withdraw their deposits when financial authorities suspended the operation of 26 mutual savings banks from January 2011 to February 2013.
The disgruntled depositors for the 26 secondary banks nationwide are poised to file a joint claim against the KDIC with Seoul Administrative Court in mid-April, said a source.
This will be the first time that the KDIC, which has an obligation to protect depositors’ money, is a defendant in a suit brought by victims of the savings bank scandal.
Consumers can participate in the class action suit in coordination with the Korea Finance Consumer Federation by April 1.
An attorney for the coming suit said consumers could claim damages of up to 50 million won as a deposit insurance payment and compensation for losses from subordinated bonds, which were sold by savings banks.
Meanwhile, the distressed savings bank industry is expected to face another round of business suspensions, 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.
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.
By Kim Yon-se and Chung Joo-won
(
kys@heraldcorp.com) (
joowonc@heraldcorp.com)
