- The Korea Deposit Insurance Corporation (KDIC) will sign a contract of selling its whole stake in Yegaram Mutual Savings Bank with Goryo Consortium on April 27, 2006. The Goryo Consortium consists of Goryo Mutual Savings Bank, Daehan Synthetic Fiber Co., Woori Bank, and Aekyung Petrochemical Co.. The total amount of selling is 42.3 billion won (12,589 won per stock, face value 5000 won), and this is more than twice the initial money invested, 16.8 billion won. The sale is expected to be completed in May after the approval of Financial Supervisory Service.
Yegaram Mutual Savings Bank, currently in normal operation, was established by the KDIC in May, 2005 in an effort to resolve insolvent mutual savings banks and assumed the fine assets and liabilities of Arim Mutual Savings Bank and Hanjoong Mutual Savings Bank, which were under suspension of operation at the time.
As a newly adopted method of liquidating insolvent financial institutions, the establishment of a bridge bank has been proved effective since it promptly normalized the insolvent financial institutions and sustained the continuity of transaction between depositors as well as borrowers. As a result, it contributed to maintaining the reliability of common banks and stabilizing the financial market.
Furthermore, the KDIC minimized the loss of deposit insurance fund by the establishment of the bridge bank, which eventually reduced the cost of resolution by 26 billion won. Based on this experience, the KDIC will continue to make more efforts to develop methods to shorten the suspension period in cooperation with the Financial Supervisory Service.
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