SEOUL: The Board of Audit and Inspection of Korea is expected to inspect three government-run banks including the Korea Development Bank, the Export-Import Bank of Korea and Industrial Bank of Korea.
“We are planning to make a decision on audit in September,” the agency’s official was quoted as saying in a local media report. This appears to pressure the banks as they have seen heavy loss in the process of corporate restructuring.
The Korea Development Bank has not yet figured out the loss of DSME amounting to around 3 trillion won. It has been criticized by media that it has been neglected the supervision of the company as the largest shareholder.
KDB said it was not aware of the DSME’s loss although it sent its chief financial official to the company. Another affiliate Daewoo Engineering & Construction is not free from the accounting fraud issue.
The Export-Import Bank of Korea has also not shown any tangible performance although it took the lead in restructuring of Sungdong Shipbuilding & Marine Engineering and SPP Shipbuilding by injecting 3 trillion won.
Also, among the financial institutions, it lent the largest amount of loan – 8.3 trillion won – to the sluggish DSME. BIS capital ratio as of the end of last year stood at 10.5 percent, below the average of 13 commercial banks – 14.88 percent.
It was found that in the last five years, among the companies the two banks lent money, 333 firms filed for court receivership and the loan amount came to as much as 5.4 trillion won. Considering that the companies under court receivership have low recovery rates, there is a high possibility that massive loss may occur.
