Flunk these banks
Published: 03 Jul. 2016, 18:22
The two institutions were responsible for the messes at debt-ridden shipbuilders and shipping companies through very lax oversight. Troubles at shipyards and shippers have been warned about since 2008. The major shipbuilders survived entirely on loans and debt relief from state-owned creditors. Yet no restructuring was ever demanded until it was too late.
Daewoo Shipbuilding and Marine Engineering (DSME) was given an additional loan even after its debt ratio soared to 7,300 percent and its managers cooked the books to conceal losses of 1.5 trillion won ($1.3 billion) in 2013-2014. KDB did not enforce a restructuring nor was it aware of the shipbuilder’s accounting tricks. Yet the bank earned top grades and gave staff fat bonuses over the last seven years. Even as DSME was window-dressing its accounts, the bank received an A grade in a 2014 performance review.
Employees of the two state-owned banks will be rewarded with sizable bonuses this year as well. Because the review is of last year’s performance, former chief executive Hong Ky-tack is get a bonus as will his staff and executives. The review board said the score is not just based on the banks’ management of corporate restructuring, but also on their so-called “contribution to creating new jobs and industries for the creative economy.”
The two banks require recapitalization capital of up to 11 trillion won of taxpayers’ money due to their exposure to soured debts of the troubled companies they were managing. They have caused astronomical losses to the national economy. It is neither fair nor just to reward them with handsome bonuses on such questionable grounds. Taxpayers would hardly understand such poor logic. The FSC must answer why it is rewarding state banks so obviously guilty of such poor management of public funds.
with the Korea JoongAng Daily
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