Despite big words on privatization scheme, state-run Korea Development Bank (KDB) was able to sell just one out of 16 non-financial companies in which the public lender owns 15 percent or more.

In 2015, the Financial Services Commission said it will have KDB divest its equity holdings in 116 companies where it had invested or relieved through debt-to-equity swap by 2018. First would be the shares in companies where it holds more than 15 percent.

According to a study by Maeil Business Newspaper Tuesday on 132 companies KDB commands through direct equity holdings and two through private equity funds, the state lender shed stakes in 91 out of 98 venture and small- and medium-sized units. But it was able to get rid of stakes in just five out of 34 companies it long held through debt conversion.

Among the 16 that are categorized as subsidiaries with a stake ratio of 15 percent or more, it was able to sell just one - Kukje Machinery Co.- to Tong Yang Moolsan Co. in August last year.

It is making progress in sales attempt on Hyundai Cement Co. and Oriental Precision & Engineering Co. but the rest 13 do not have any hopes on finding buyers for near future.

When including stakes in Daewoo Engineering and Construction and KDB Life Insurance Co. where it holds stakes through private equity funds, privatization process is at a mere 16.7 percent.

The longer it retains the shares, the harder it would be for the state bank to sell them. The state bank has been responsible for Daewoo Shipbuilding & Marine Engineering Co. (DSME) since debt-to-equity conversion in 2000. The shipbuilder is getting costlier to sustain, requiring another 2.9 trillion fresh funding after 4.2 trillion won bailout in 2015. Yet the state lender cannot attempt to sell it as selling it cheaply would draw criticism about squandering of tax funds.

By Chung Seok-woo and Yoo Tae-yang

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]