Investment-trusts to get 2.5 trillion won

The government has decided to provide 2.5 trillion won of financial aid to domestic investment-trust companies by purchasing the commercial papers issued by Daewoo Group.

Also, the government is planning to purchase Daewoo-issued commercial papers that are owned by banks, securities firms and insurance companies between October and December this year.

The Ministry of Finance and Economy announced Tuesday that the government would invest 1 trillion won in Seoul Guarantee Insurance through the Korea Deposit Insurance Corp. The goal is to improve the cash flow of investment-trust companies.

The KDIC will borrow 1 trillion won from three domestic banks -- 500 billion won from KorAm Bank, 300 billion won from Shinhan Bank and 200 billion won from Hana Bank -- in order to raise the funds.

The capital investment in Seoul Guarantee Insurance by the KDIC will be completed Sept. 27.

Also, Korea Asset Management Corp. is expected to purchase 1.83 trillion won worth of Daewoo CPs from investment trust companies at 1.47 trillion won on Sept. 28.

In addition, KAMCO plans to purchase 445.2 billion won worth of Daewoo CPs from securities companies at 357.5 billion won during October and 1.62 trillion won worth of Daewoo CPs from 17 domestic banks at 1.3 trillion won from October through December.

Further, KAMCO will purchase 18.6 billion won worth Daewoo CPs from two domestic insurance companies at 14.9 billion on a gradual basis.

The government hopes to stabilize the capital market by supplying funds to domestic financial institutions, including investment-trust companies, by solving their problem associated with Daewoo CPs.