Rhyme Bad Bank Launch Faces Final 'Pain'... Shinhan and Woori Compete to Avoid Majority Shareholder Role

[Asia Economy Reporter Park Jihwan] Ahead of the launch of the 'bad bank' to resolve Lime Asset Management's non-performing funds, major distributors such as Shinhan Bank and Woori Bank are engaged in a cautious battle to avoid becoming the largest shareholder.

According to financial authorities and the financial investment industry on the 24th, the 20 Lime fund distributors who agreed to participate in the establishment of the bad bank have completed a broad agreement on participation and are now coordinating the details.

Financial Supervisory Service Chairman Yoon Seok-heon recently declared through a written press briefing that the "bad bank will be established in May," raising expectations that distributors will finalize their agreement and officially launch the institution as early as this week.

A bad bank is a temporary institution operated to handle non-performing assets of financial companies. This is the first time a bad bank in the form of an asset management company is being established.

The capital of this bad bank, aimed at recovering investment assets of Lime funds, is expected to be around 5 billion KRW, with an operating period of about six years.

However, distributors are engaged in a final standoff over details such as the investment ratio and amount. The bad bank’s structure requires higher contributions proportional to the remaining balance of Lime funds whose redemption has been suspended. The largest shareholder will depend on how the criteria are set.

As a single financial institution, Woori Bank has the largest sales amount at 357.7 billion KRW. However, when considering group companies, Shinhan Financial Group (Shinhan Financial Investment 324.8 billion KRW, Shinhan Bank 276.9 billion KRW) has a larger total.

A financial investment industry official explained, "Being the top contributor to the bad bank may be burdensome in terms of media attention and responsibility for the Lime incident," adding, "Negotiations on the contribution ratio criteria are not easy."

The financial authorities plan to expedite the new registration review and investment approval procedures as soon as the distributors complete the establishment agreement.

This content was produced with the assistance of AI translation services.