Daegu Bank to Exercise Call Option on 200 Billion KRW New Hybrid Capital Securities Next Month
DGB Daegu Bank announced on the 6th that it plans to exercise the call option on subordinated bonds worth 200 billion KRW in late May.
The reason Daegu Bank is exercising the call option is due to increased uncertainty in the financial market following the write-off of approximately 22 trillion KRW worth of contingent subordinated bonds during the recent bankruptcy and sale process of Credit Suisse (CS).
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A Daegu Bank official explained, "Typically, the issuance amount of subordinated bonds is included in the bank's BIS capital, so exercising the call option could reduce capital and potentially impair the bank's capital adequacy. However, since Daegu Bank's subordinated bonds have already been deducted from capital, exercising the call option next month will not affect the BIS capital ratio."
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