KEPCO's yawning loss may eat into capital adequacy ratio of Korea's bank of last resort

[Photo by MK DB]

The woes from colossal debt and deficit of Korea Electric Power Corporation (KEPCO) have come to weigh over state lender Korea Development Bank (KDB) which commands as the state utility monopoly’s largest shareholder with 32.9 percent.

KEPCO posted 7.78 trillion won ($6 billion) in operating loss in the first quarter of the year, already overwhelming last year’s full-year loss. The loss is reflected into the consolidated balance for the policy bank.

If KEPCO ends the year with a loss of 30 trillion won as some institutions project, KDB would have to book 9 trillion won in losses.

KDB’s profit from equity ownership stopped at 715.4 billion won last year, compared with 1.89 trillion won a year ago, due to KEPCO’s loss of 5.86 trillion won.

The capital ratio of the country’s bank of last resort could sharply deteriorate as the result.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]