Samsung Life Set To Bail out Samsung Card

Samsung Card Co., the credit card unit of the Samsung Group, is allowed to receive up to 750 billion won in investment and up to five trillion won in loans from Samsung Life Co., another unit of the business conglomerate.

With the fresh injection, the insolvent credit card issuer can evade the liquidity pressure. At a regular meeting on March 26, the Financial Supervisory Commission (FSC) approved the new credit line of up to five trillion won and a capital injection of five trillion won for Samsung Card.

The new credit line will stretch for three years starting April 1. The interest rates depend on market rates.

Samsung Life will put up 750 billion won in the first batch of investment by April 16, when it will become the card issuer’s second-largest shareholder with 35.7 percent in the card issuer. The largest shareholder is Samsung Electronics with 46 percent.

The FSC allowed Samsung Life to invest the five trillion won out of its assets unrelated to policy holders so shareholders are held responsible for the injection. It also instructed the life insurer to put up collateral for two trillion won.

Additionally, it instructed the insurer to freeze or collect loans when Samsung’s credit rating goes down below BBB credit rating or when its capital ratio goes down below eight percent.

Keuk-In Bae bae2150@donga.com