Lotte Card Classifies 79.3 Billion Won in Homeplus Bonds as Estimated Losses, Denies Claims of "Risk Management" Support

Explanation Provided in Response to Assemblyman Lee Inyoung's "Homeplus Support" Criticism

On April 17, Lotte Card stated that the classification of Homeplus-related bonds worth 79.3 billion won as estimated losses was a measure taken for risk management purposes.

Lotte Card Headquarters, Jung-gu, Seoul. Lotte Card

In a statement released that day, Lotte Card explained, "The classification of our holdings of Homeplus bonds as estimated losses was not the result of insolvency, but rather a conservative risk management measure to prepare for uncertain market conditions."

According to the office of Lee In-young, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, Lotte Card classified the entirety of its Homeplus-related bonds, amounting to 79.3 billion won as of the end of last year, as estimated losses.

Of this amount, the largest portion consisted of bonds related to transactions using corporate purchase-only cards (60 billion won) that Homeplus used for payments to its suppliers.

Regarding this, Assemblyman Lee pointed out, "Lotte Card has taken on the debt that Homeplus could not repay," and added, "When Homeplus faced difficulties, MBK Partners mobilized Lotte Card, its affiliated financial company, to provide financial support, which in turn increased the delinquency rate of the card company."

Both Homeplus and Lotte Card have MBK Partners as their major shareholder.

A representative from Lotte Card stated, "The classification as estimated losses is based on conservative accounting principles, considering the uncertain economic environment and business conditions," and added, "This is not a confirmation of asset deterioration, but a decision to enhance financial transparency by accumulating allowances in preparation for potential risks."

The representative further clarified, "This accounting treatment is part of our risk management process," and added, "Interpreting this as support linked to a specific shareholder company could cause misunderstandings."

In response to the criticism that Homeplus concentrated purchase-only card transactions at Lotte Card prior to its rehabilitation filing, the representative explained, "The increase in transaction volume occurred as a result of expanding Homeplus's online business and advancing its purchasing structure before the rehabilitation."

The representative also stated, "All financial transactions with Homeplus were conducted lawfully, based on internal review procedures and market interest rates," and added, "Lotte Card always prioritizes customer protection and the company's corporate value."

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