According to the claims made by the Korea Finance Corp., the Bank for International Settlements-defined capital adequacy ratio for Korea Development Bank was 13.54 percent as of the end of June this year. Once the two institutions are merged together, however, the ratio would immediately fall by 1.6 percentage points. Given the unified bank must deal with bad debts of insolvent firms such as STX Group, the corporation contended, its capital adequacy ratio may fall below the 10-percent level easily.

 

In addition, it went on to say, Korea Development Bank will be subject to criticisms that it encroached upon investment banking areas reserved for private banks and would end up wasting taxpayers' money from a huge sunken cost in privatizing the bank.