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A container ship operated by HMM, South Korea’s largest container carrier (Photo: HMM) |
[Alpha Biz= Paul Lee] The Korea Development Bank (KDB) has stated that it needs to move quickly to divest its stake in HMM in order to reduce its financial burden.
According to a work report submitted on Wednesday to the office of Kim Sang-hoon, a member of the National Assembly’s Political Affairs Committee, KDB said it sees a need to pursue a prompt sale of its HMM shares.
KDB explained that the objective of restructuring has been achieved following HMM’s management normalization, and that continued ownership of the shipping company’s shares is weighing on the bank’s financial position. Under KDB’s internal rules, when the purpose of an investment has been fulfilled, the shares should be sold promptly at market prices, taking into account appropriate transaction methods.
From a corporate governance perspective, KDB also said that amid intensifying global competition, HMM requires a responsible owner with the global capabilities needed to make long-term and strategic investment decisions.
At the same time, the policy bank noted that given HMM’s industrial and economic significance, the timing and method of the stake sale will be determined through consultations with relevant government agencies.
Under current Bank for International Settlements (BIS) regulations, banks are prohibited from holding equity stakes in a single company exceeding 15% of their capital. Any excess holdings are subject to a 1,250% risk weight when calculating capital adequacy ratios, potentially weakening a bank’s BIS ratio. As KDB exercised conversion rights on HMM perpetual bonds and HMM’s share price rose, concerns emerged over a decline in KDB’s capital ratio.
In response, KDB requested an exemption from the Financial Supervisory Service, which granted a non-enforcement opinion in June last year, allowing temporary relief from BIS ratio penalties.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
