Chairman of the Rogue Bank was Ousted, and had to Replaced by SBI Investment…..
February 20, 2013
On February 7th, Japanese edition of Chosun Daily, a Korean newspaper reported: “Hyundai Swiss Saving s Bank, one of the biggest savings bank announced to place 194.1 billion won (16.6 billion yen) worth of new equities to SBI Finance Korea (Gannam-ku, Seoul), a subsidiary of SBI Holdings, a Japanese financial holding company. SBI Finance Korea is the second largest shareholder of the Hyundai Swiss Saving BankⅠwith 20.9% now, and will be the largest, 89% share with this underwriting. SBI will also underwrite 43.3billion won (3.7 billion yen) of Hyundai Swiss Saving Bank Ⅱ,ending up as its 94% shareholder. Bank Ⅰis the top shareholder of Bank Ⅲ and Bank Ⅳ, thus SBI’s investment would control the whole group.”
Optimistic Announcement Only Denominated in Won
As FACTA reported in issues of October 2012 and February 2013, Hyundai Swiss is more like a credit union than a bank. SBI invested in the BankⅠ and Bank Ⅱ, of which 4.8 billion yen worth of dud loan and roundabout loan were revealed by authority, and their equity could not meet regulatory requirement. On December 21st, as we reported, SBI was forced to submit “investment confirmation letter” to Korean FSA to underwrite the bank’s equities. Now, it was 20.3 billion yen additional money SBI must invest into such a shady bank. The day of the Korean paper reporting the news, SBI was to announce its 3Q earnings, and it set the announcement earlier than usual, from regular 15:00 to 13:30, while the Tokyo Stock Exchange was opening, and announced this surprising investment. It was only denominated in won, not in yen, and the journalists were perplexed. At the presentation with analysts, the dictator Yoshitaka Kitao was elated. Thanks to the “Abenomics”, SBI’s stock price recovered from 461 yen of September 25th to 800 yen this day. As a renowned bull, he even mentioned: “We have been defensive till now, but we will turn offensive forward”. SBI Securities, only viable subsidiary, is on recovery with vibrant stock market, but Kitao does not have any other promising business other than the online broker. As usual, his remarks were punctuated with optimistic bombasts. “Korean GDP is on par with that of Kyushu, and with that size, upturn and downturn are sudden in both ways, so we can expect a lot.” When we look into the past 3 years of financial numbers of the Hyundai Swiss, only red inks, or black triangles appear. In the analyst meeting, someone asked about the perspective of turning them around. Takashi Nakagawa, senior managing director, could not deliver a clear-cut answer. “It must be in red for the first year, as morale is down. But if we execute properly by increasing the lending rate by pursuing synergies, result would follow….”.Execute properly? He invests, with such an easygoing explanation, to risk 20 billion yen of shareholders’ money into the bank with combined annual deficits of 10 billion yen. Shareholders of SBI must revolt, as SBI in 2006 invested 800 million yen to the Hyundai Swiss Savings Bank Ｉand Ⅱ. It can just write of that amount, if the business of the savings bank deteriorated, but it does not, why? The answer being very simple: as we reiterated, SBI has been using this saving bank to frame up the masquerade profits in the past. 1.4 billion yen was created by selling apiece of the shares of this savings bank in March 2011, and 7.3 billion yen was created in March 2012. Without those profits, SBI must have been downgraded the rating agency, and could not have issued the SBI note, its only life line. It may sound pesky, but we would show you, regardless of the fact that Kitao did not mention anything, the true story of the bank. SBI says Hyundai Swiss boasts the largest deposit amount in Korea. 5.5 trillion won is only 480 billion yen or so, and our counterpart in Korea says the long-lasting manager of it was people who lent freely to his relatives and did not recover at all with its deposits gathered from general public with higher interests. These people, headed by Kim Guan-Jing, who was ousted by the Korean FSA, and directors in the past and present, who were penalized of their wrongdoings by levies, were totally corrupted. The bank is tattered by full of dud loans and stolen deposits, and never worth any improvements, as Nakagawa lukewarmly points out. How come he can expect a synergy, with such an egregious practice of Hyundai Swiss.
Never Revealing Any Wrongdoing
In the presentation, SBI was explaining to solicit chip-in investors from Korea. Who in Korea would invest into the saving banks, which were bankrupt and run-on-bank occurred since 2010? SBI did not reveal any negative information on the savings bank in its release on December. Nor did it disclose the egregious nature of the bank to its shareholders.
SBI expects the payment to the bank in March 25 to 26th. That timing must have been set before the full-year auditing of Delloite Tohmatsu. The auditor must impose impairment to SBI, if investment amount was not in full, or else, not taken hold at all.
Moreover, where SBI will generate 20 billion yen cash? The Hyundai Swiss investment is allotted to existing shareholders, and if other shareholders did not comply, SBI will cover them. Kim Guang-Jing will never pay a cent. SBI Note may be difficult with outstanding of more than 100 billion yen. Or else, by using SBI Securities as the lead manager, raising equities? Other alternatives include selling subsidiaries, or the sale proceeds of Orbis holdings of SBI, of which we suspected being a dummy shareholder, would be invested via roundabout route. That is precarious. We would like to watch closely how Kitao “on offensive aggressively”, concluding with his lies.