[2021 National Audit] "KDB, Only Looking Out for Itself with Funds from Restructuring Companies"

[Asia Economy Reporter Kim Jin-ho] Korea Development Bank (KDB) has been criticized for profiting from the funds of companies under restructuring management.

Kang Min-guk, a member of the National Assembly's Political Affairs Committee from the People Power Party, announced on the 15th that, after analyzing the 'HMM Surplus Funds Operation Status' data submitted by KDB, 67.4% of HMM's surplus funds amounting to 4.03 trillion KRW were entrusted to KDB.

Of this, 85%, or 2.31 trillion KRW, is held in time deposits, with 379 billion KRW and 27.7 billion KRW subscribed to demand deposit-type specific money trusts (MMT) and demand deposit-type savings deposits (MMDA), respectively. Based on all financial institutions including KDB, 63.2% (2.55 trillion KRW) of HMM's total surplus funds are concentrated in time deposits. MMDA and MMT (RP) account for 24.9% (1.004 trillion KRW) and 7.8% (314 billion KRW), respectively.

Income from surplus fund operations over the past nine months this year, excluding products maturing early, amounted to only 2.7 billion KRW. Regarding this, Representative Kang claimed that KDB's moral hazard is the reason for the minimal earnings from large surplus funds kept in KDB's low-interest deposits. All fund executions of HMM require approval from the fund management team dispatched by KDB.

Representative Kang criticized, "KDB tying up most of the surplus funds of HMM, a restructuring company, in KDB financial products and using them to generate interest income and improve performance is the height of moral hazard."

He added, "There is a high possibility that such inefficient and haphazard fund management is occurring in other restructuring companies besides HMM," urging the Financial Services Commission to inspect the actual status of surplus fund operations.

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