Shame on state-run banksThe Park Geun-hye government and the Bank of Korea are working hard to find efficient ways to increase funds for the cash-strapped Korea Development Bank (KDB) and the Export-Import Bank of Korea (Korea Eximbank).
The government and central bank are trying to come up with appropriate measures — whether it be a Korean equivalent of quantitative easing or a supplementary budget — to straighten up the two embattled state-run banks ahead of a massive restructuring of insolvent companies, including Daewoo Shipbuilding & Marine Engineering (DSME).
But the two government-run banks teetering on the edge of insolvency are too lax because they are only busy looking after their own interests.
KDB’s labor union held a rally at its headquarters in Seoul to protest the government’s decision to introduce a performance-based salary system for employees. Workers at KDB and Korea Eximbak on average receive an annual salary of about 100 million won ($86,000), the 10th highest among over 300 public companies. Their salaries have also increased by about 4 to 5 million won since 2014, even when KDB’s debt-to-capital ratio soared to 800 percent and Korea Eximbank’s rose 640 percent after pumping 21 trillion won into DSME.
The CEOs of the two state banks were no better. When DSME registered more than 5 trillion won in deficit due to poor management, the head of KDB took a special bonus of 154 million won in 2014 and 181 million won in 2015. If you add his base salary, that amounts to over 360 million won a year. KDB went so far as to raise its CEO’s base salary to 195 million won this year, a 5.96 percent hike.
We wonder why the embattled state-run bank offered such good treatment to its head. Over the last eight years, the government injected more than 10 trillion won in taxpayer money into the two state-run banks. Yet no one takes responsibility for their financial troubles.
Nevertheless, the two banks are demanding that insolvent companies come up with drastic plans to cut their manpower and salaries. The two creditor banks have rejected a call to fix their loose management from the Board of Audit and Inspection and other financial authorities. So how can they convince the troubled shipbuilding and shipping industries to undergo painful restructuring?
No matter how urgent the restructuring, the public will not allow the government to pour their taxes into such banks. They must first fix themselves, and the process must begin with the government holding those in charge accountable.
JoongAng Ilbo, May 6, Page 26