As the impeachment motion against President Yoon Suk Yeol passes through the National Assembly, forecasts suggest that the privatization efforts of HMM and KDB Life Insurance may be delayed. Recently, various options concerning the sale of HMM have been raised due to concerns regarding the capital soundness of its largest shareholder, the Korea Development Bank (KDB). However, as the situation shifts toward impeachment, discussions related to the sale are expected to stagnate for the time being.
According to the industry on the 17th, the Korea Development Bank (KDB) and the Korea Marine Industry Promotion Corporation (KOMIPO) plan to convert HMM's permanent convertible bonds (CB) worth 720 billion won into shares by April of next year. If HMM's stock price does not fall below 5,000 won, which is below the par value, and the CB is not converted, issues of management betrayal could arise.
If KDB converts the CB into shares, the equity stake of HMM might increase, leading to a decline in soundness indicators. When KDB converts HMM's CB into shares, its stake will rise from 30.87% to 33.95%, while shares have a higher risk weight than CB. As of the end of September this year, KDB's Basel Committee on Banking Supervision (BIS) capital adequacy ratio stands at 14.36%. There are also predictions that KDB’s BIS capital adequacy ratio could fall below the regulatory recommendation of 13% if KDB converts HMM's CB into shares.
If the BIS capital adequacy ratio decreases, borrowing costs will rise, and lending capacity will diminish. As the number of HMM shares held by KDB increases, this figure will drop, potentially causing problems for policy finance, such as support for the semiconductor industry.
Many in the industry forecast that discussions on the sale of HMM will not proceed for the time being. In a situation where the government may change, there is no reason for officials to push hard for it. A source from the shipping industry noted, "While KDB has the need to sell its stake in HMM, KOMIPO does not feel the necessity to do so," adding, "The idea of selling only KDB's stake while leaving KOMIPO's stake untouched lacks feasibility."
Kim In-hyun, head of the Maritime Law Research Center at Korea University, stated, "For the sale of HMM, someone has to take responsibility and make a policy decision, but in the current uncertain situation, no one will be able to make such a decision."
The sale of KDB Life Insurance has essentially fallen through. KDB has attempted to sell KDB Life Insurance six times since 2014, but all efforts have failed. Despite injecting 1.5 trillion won and implementing restructuring, it is still regarded as financially vulnerable. The insurance industry believes that KDB Life Insurance will eventually be incorporated into KDB as a subsidiary. KDB is reportedly also considering the incorporation of KDB Life Insurance into its subsidiaries.