Recapitalization Prior to Corporate Restructuring
The board of directors of Korea Development Bank (KDB) approved a subordinated industrial financial bond issuance limit of up to four trillion won on April 10. The purpose of the approval is recapitalization prior to corporate restructuring.
For the period of 2015 to 2019, KDB’s subordinated industrial financial bond issuance was 500 billion won on annual average. The figure is likely to increase a lot this year. The bank has issued that type of bonds worth a total of 5.4 trillion won and its issuance limit is 10 trillion won according to its articles of association.
The bonds are classified as capital. The increase in issuance is to maintain capital adequacy in preparation for restructuring. The bank’s BIS capital ratio was 13.97 percent as of the end of last year, which is higher than the minimum required level of 10.5 percent and lower than South Korean banks’ average at 15.25 percent. The ratio is likely to fall in that the bank is supposed to provide support for Doosan Heavy Industries & Construction, Korean Air, Asiana Airlines, low-cost carriers and companies in major industries.