RETAIL BANKING | Cesar Tordesillas, Korea

Eximbank to sue Kookmin Bank over Sungdong

The Export-Import Bank of Korea is suing KB Kookmin Bank over the latter's withdrawal from Sungdong Shipbuilding and Marine Engineering.

The former is claiming 17 billion won or US$14.59 million.

Eximbank said it will file a lawsuit against Kookmin as the liquidation value of the shipbuilder’s bonds, owned by Kookmin, is estimated at 17 billion won less than the share it must pay when creditors agreed to put the shipbuilder under a debt rescheduling scheme in March.

According to Eximbank officials, Kookmin should pay 54.2 billion won under the debt retooling program based on the percentage of its bond amount to the total. However, the liquidation value of Kookmin’s bonds of 289.5 billion won is calculated at just 37.2 billion won.

“Kookmin’s bonds in Sungdong are valued at 37 billion won if it exits from the creditor group, so the lender should pay 17 billion won more to take responsibility of its share of 54 billion won,” said Min Eung-sik, a director of Eximbank.

“We will handle the matter by principle. We will take the issue to court if Kookmin does not pay."
Kookmin exited from the creditor group in September as it opposed the group’s move to extend additional credit to the ill-fated company.

Eximbank is the main creditor of the company which was put under a restructuring program by creditors due to poor performances. It marked a net loss of 385.2 billion won last year, according to the Financial Supervisory Service.

However, Kookmin says it has no obligation to pay the money as Eximbank underestimated the value of its bonds. Kookmin said that there is a huge difference between the two lenders over calculations, which won’t be narrowed soon. The biggest lender in the nation said that if a legal dispute is the only option of resolving the issue, then so it be.

Kookmin also plans to file a counter lawsuit against Eximbank and other creditors for the loss of 130 billion won incurred by foreign exchange forward contract after it pulled out of the creditors’ group. Kookmin says Eximbank and other creditors should pay for the loss because it happened after the bank’s exit.

However, Eximbank argues that it was Kookmin’s responsibility to hedge the contract, so the loss is the lender’s, not that of other creditors.

Eximbank CEO Kim Yong-hwan has criticized Kookmin for its lack of knowledge and experience in corporate financing.

“Kookmin has no idea what corporate banking is because it has long focused only on retail banking. I think the lender had better focus only on retail business,” said Kim in a meeting with reporters.

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