The one thing I demanded from Ahn Seok-gil was simple:
To actively publicize the dire financial state of Hanho Savings Bank to both the government and the media.
And the effect was immediate.
"This is chaos."
I watched the news about Hanho Savings Bank with a satisfied smirk, a glass of soju in my hand.
After silencing the bank's executives with a surprise audit and revealing the extent of their bad debts through the media, Korea was in an uproar.
Depositors rushed to withdraw their money, and investors panicked, realizing the bank's equity had been wiped out.
The news showed crowds of people gathered in front of Hanho Savings Bank branches, reporting on Korea's first bank run.
"This should get the government's attention."
A bank run was a collective withdrawal of deposits by customers who had lost confidence in the bank.
Even a healthy bank could collapse under a bank run, let alone an insolvent bank like Hanho Savings Bank.
"They might have survived today, but it's only a matter of time."
I smiled.
"Their downfall will be swift."
The government, which had been aware of Hanho's financial troubles after the audit, was caught off guard by the media coverage and hurriedly issued a statement assuring depositors that their money was protected under the Deposit Insurance Act. But no one trusted the government anymore.
"I wonder how they're planning to handle this."
I hummed and called Ahn Seok-gil.
[This is Ahn Seok-gil, Vice Minister of Finance and Economy.]
"Vice Minister, it's Baek In-hwi."
[I've been waiting for your call.]
"What's the government's plan for Hanho Savings Bank?"
[We'll observe the situation until tomorrow, and if it doesn't improve, we'll suspend their operations.]
I smiled.
"Suspension of operations. That's practically bankruptcy, isn't it?"
[That's right.]
"Hmm, and then what? Liquidation or rehabilitation?"
[Rehabilitation. The financial sector is contagious. If Hanho Savings Bank collapses due to a bank run, other banks won't be safe.]
If Hanho Savings Bank, a secondary financial institution, collapsed, it would trigger a panic among other savings banks.
Although my knowledge of finance was limited to savings, interest, and loans, I had years of experience managing billions of won and hundreds of employees.
It was natural for people to protect their assets.
"Rehabilitation, good. And the taxpayers will foot the bill, right?"
[…It can't be helped. We have to contain the situation before it spreads.]
I said with a sympathetic tone,
"It'll cost a fortune to rehabilitate Hanho Savings Bank, which is already facing a bank run and suspension of operations, on top of its existing bad debts. It's such a shame."
[…]
Ahn Seok-gil didn't respond, perhaps finding it absurd that I, the one who orchestrated this crisis, was expressing sympathy.
"It must be a nightmare for the government."
[Th-that's right.]
"They're already borrowing money, and now they have to clean up the mess created by a bank. I can't even imagine how frustrating it must be. So…"
I smiled slyly.
"Inform your superiors that Joongang Investment Corporation is willing to lend a hand."
[What do you mean…?]
"I'm saying we're interested in acquiring the bank, under the right conditions."
Ahn Seok-gil, who had thought my previous mention of acquisition was just a passing remark, was surprised.
[Are you serious about acquiring it?]
"What do you think, Vice Minister Ahn, as a financial expert? What would happen if Joongang Investment acquired Hanho Savings Bank?"
Ahn Seok-gil hesitated and then said,
[I personally don't think Hanho Savings Bank can survive on its own. The bank run has already started, and their bad debts are massive.]
"From the government's perspective?"
[…They wouldn't object to someone taking the bomb off their hands.]
I tapped on my calculator.
"My terms are simple. I hate complicated ownership structures, so we'll clean it up. First. And second, the government will write off at least half of the bad debts. I'll pay 100 billion won for a 100% stake."
[The shares are practically worthless, so that's not a problem. But writing off half of the bad debts? That would cost at least 2 trillion won…]
I said coldly,
"You're not in a position to make demands. Think about it the other way around. We're not asking you to write it off, we're saying we'll assume half of the burden. We'll cover half of the public funds needed for rehabilitation in exchange for the bank's shares. It's not a bad deal."
It was an incredibly generous offer for the government.
Rehabilitating Hanho Savings Bank, which was about to enter receivership, would require at least 5 trillion won in public funds.
Of course, the government could nationalize the bank by covering the entire amount. But they were already trying to privatize their existing state-owned banks to reduce their burden. Would they really nationalize a failing bank with a 5 trillion won deficit when there was a willing buyer?
"And Vice Minister Ahn, you shouldn't be worrying about the government right now."
Ahn Seok-gil was startled.
[O-of course. It's a very generous offer. It's a bit sensitive since a bank is being acquired by foreign capital, but it'll save the government over 2 trillion won, so it should go through without any problems.]
I smiled.
"That's right. It's a great deal. Who else would acquire the bank under such favorable terms in these times?"
[That's right.]
I said in a subtle tone,
"So, there's one last condition."
[One last condition?]
I smiled.
"Loss compensation for at least three years. As you know, acquiring the bank now is a guaranteed loss. If the government compensates us for any losses incurred during the next three years, we'll assume half of the bad debts."
The situation was complicated, with Hanho Savings Bank's shareholders and investors, and Joongang Investment's demands. But the government's determination to stabilize the financial sector was strong enough to overcome all obstacles.
We agreed to let the government acquire at least a 30% stake in Hanho Savings Bank, as they needed to inject public funds, in exchange for them assuming only one-third of the bad debts. And with that, the acquisition of Hanho Savings Bank was practically a done deal.
There were still some details to be finalized, but the news of Joongang Investment Corporation acquiring Hanho Savings Bank was already being reported in the media, and the public was reassured by the news that the government and a foreign investor were working together to save the bank. But Chunha Trading's office was in chaos.
"It's not too late. We can still cancel the bank acquisition."
Park Jong-bum nodded vigorously in agreement with Maru's words.
"I agree. We're buying a ticking time bomb with trillions of won in debt for a mere 100 billion won. And we have no experience in the financial sector. This is too risky."
I chuckled at their vehement objections.
"That's why we negotiated the loss compensation clause. We're only investing 100 billion won. The government will compensate us for any losses. What are you worried about?"
Park Jong-bum said with a frustrated expression,
"The compensation is only for three years. There's no guarantee the bank will recover within three years. And what if it continues to lose money after three years?"
"Don't worry, we'll turn it around quickly."
"What?"
"What do banks do? They handle money. They're basically loan sharks. Depositors are the lenders, and corporations are the borrowers. It's a simple principle."
Park Jong-bum said incredulously,
"That 'simple principle' is what led to the collapse of so many banks. What if the bad debts increase?"
I rested my chin on my clasped hands.
"Why do bad debts occur?"
Park Jong-bum hesitated.
"Because the companies that borrowed the money went bankrupt."
"That's right. But banks aren't stupid. They lend money based on collateral. So why are there bad debts?"
"Well…"
"It's simple. Because banks are too soft."
My eyes gleamed.
"They make exceptions for long-term clients, they extend loan deadlines, they lend more than the collateral is worth at the government's urging… They're too soft. They think they're something special because they're called the 'heart of the economy.' But they're just legalized loan sharks. So they should act like loan sharks."
I pointed at a newspaper headline.
"Hanho Savings Bank sold to foreign capital. Was it a hasty decision by the government?"
I smiled.
"That's right. We're foreign capital. We don't have to worry about appearances or connections in Korea. We don't have to make exceptions for anyone. We'll collect the debts on time, no extensions. We'll seize the collateral immediately if they can't pay. Actually, seizing the collateral is more profitable for us. What do we do?"
Park Jong-bum, finally understanding my plan, said in awe,
"Ah, you're going to handle it like a bankrupt company."
I smiled cruelly.
"It's easy for us to undervalue distressed inventory. We're the buyers and the appraisers, so we can do whatever we want with it, unlike real estate or machinery, which require professional appraisers."
Maru said worriedly,
"The government won't be happy if we operate like that."
I snapped my fingers.
"That's the point. We use the companies that borrowed money from us as hostages. Imagine a healthy company facing a temporary crisis and about to default on a 1 billion won bill. The government will ask us to extend the deadline, but we'll refuse. They'll have no choice but to use other banks to repay the debt."
I chuckled.
"We'll show them how ruthless Chinese capital can be. Then they'll be scrambling to repay their debts on time to avoid being bitten by a mad dog."
Maru said, dumbfounded,
"Do you think any company would borrow from Hanho Savings Bank after that?"
"Money talks. Desperate people will borrow regardless. And this isn't a long-term plan. The three-year loss compensation clause wasn't just for show. We'll turn the bank around within three years and sell it at a high price."
My eyes gleamed.
"We profit if they repay the loans, we profit even more if they don't, the government compensates us for any losses, and we're acquiring a 70% stake in a bank with 20 trillion won in assets for a mere 100 billion won after clearing out the bad debts. It's a guaranteed profit."
TL/n -
Hey! If you're reading this, drop a comment and let me know — I'll upload multiple chapters together if enough of you are interested! 💙