Gov¡¯t makes special deal with Hanvit Bank

The government¡¯s closed-door agreement with Hanvit Bank was revealed to include Hanvit receiving a public fund injection of 1.1 trillion won under the condition that the bank enters the government-directed financial holding company.

This fact was disclosed in the report submitted to Lee Han-Ku of the opposition Grand National Party, who is a member of Parliamentary Investigation Special Committee on public funds.

According to the report by the Financial Supervisory Service (FSS), the Financial Supervisory Commission (FSC) resolved in writing Dec. 16 last year that the authorities should support additional public fund injection into Hanvit Bank under the above-mentioned condition.

Originally, the bank pursued a plan to stand on its own by a self-rescue plan.

In addition, the FSC gave an additional favor that the bank¡¯s obligation to reduce its bad loans of 9.1 trillion for its self-rescue was reduced to 8.1 trillion won. Last September, Hanvit Bank submitted to the government its self-rescue plan including the independent financial holding company, but the FSS didn¡¯t approve the plan and requested an amended proposal.

Meanwhile, according to the Korea Deposit Insurance Corp.¡¯s report submitted to Assemblyman Lee, as of the end of 2000, the total bad loans at all the public fund-injected banks amount to 8.17 trillion won, which is much more than previously announced 5.88 trillion.