Government Protects New Bridge Unreasonably

As the government defended New Bridge Capital which is the biggest shareholder after Dong-A Ilbo reported that the company had breached Bank Regulation by controlling the First Bank via two paper companies, criticisms are raised against the government for its failure of practicing its supervisory discretion.

On the30th, Financial Supervisory Service (FSS) insisted “New Bridge Fund has maintained the share portion of the First Bank as it acquired the bank, so it does not need to report the change of major shareholders.”

An official of Korea Institute of Finance who involved in the amend of Bank Regulation recently indicated “The financial authority interprets 5he regulation in contraction.” And added “If the government`s interpretation is employed, New Bridge, the first shareholder of the bank can sell its shares without discussion with the second shareholder, Korean government. It is very risk conception.”

The person explained “Texas Pacific, the major shareholder of New Bridge, is a major shareholder of the First Bank according to the bank regulation, so the change of Texas Pacific`s possession should be reported to FSS.” And added “One of the reasons for the amend of Bank regulation in this year is to prevent transferring ownership of funds under New Bridge to others by selling their possession.”

It is known that Texas Pacific purchased the shares of the First Bank owned SoftBank and Blum Capital partners. At the moment the portion of Texas pacific reaches 80%.

The government is indicated not to supervise properly the management as the second shareholder and the administrator of public fund.

ykim@donga.com