ChoongBuk Bank"s Shares Rendered WorthlessThe Financial Supervisory Commission(FSC) announced on February 20 that it ordered ChoongBuk Bank to effectively reduce all of its shares, with a basic total capital of 25 billion won, to zero.
The FSC explained that as a result of its investigation into the bank's financial statements, its liabilities surpassed its assets by as much 61 billion won.
However, the FSC intends to confer the right to stockholders to sell their shares back to the bank at a fixed price to be determined at a later date in order to save some of the investors' principal.
So although the current shares of ChoongBuk Bank are rendered worthless, the FSC will force the Korea Deposit Insurance Corporation to use, what is essentially public money, to first buy the worthless stock at as yet undetermined price, and secondly to pay back the bank's liabilities to creditors.
A source at the FSC said, ' The scale of public money which will be invested in ChoongBuk Bank will likely be about 220 billion won in order to raise the BIS capital adequacy ratio to more than 10 percent.'
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