It was found that there were 94 cases in which the Credit Guarantee Fund provided both guarantee and investment support to a company, but suffered losses in both cases.
According to data submitted by Shinbo by People Power Party lawmaker Park Seong-hoon, a member of the National Assembly's Political Affairs Committee, on the 14th, there were a total of 94 cases in which investment loss and guarantee subrogation occurred simultaneously during the 'guarantee-linked investment' process from 2016 to last August.
Guarantee-linked investment is a complex financial product launched by Shinbo to support small and medium-sized businesses in raising funds and improving their financial structure. Support is often provided to startups that have difficulty securing initial funding.
Shinbo invested 54.64 billion won in these 94 places, but incurred a loss of 51.86 billion won. If we add the guarantee subrogation amount of 82.92 billion won, the total related investment loss and subrogation amount is 134.78 billion won.
There are criticisms that both guarantees and investments for the same company have become insolvent. The guaranteed subrogation amount also includes amounts that can be recovered after the fact, so although it is not the entire final loss, it can be viewed as a potential loss.
However, Shinbo's position is that the amount of loss itself is insignificant, considering that there are a total of 846 companies subject to guarantee-linked investment during this period and the cumulative support amount is 2.2 trillion won.
He also reported that there are precedents for companies such as Quilitas Semiconductor, Now Robotics, Blue M Tech, and Innotech to be listed on the KOSDAQ market through guarantee-linked investment.
However, a trend of increasing insolvency is confirmed not only in Shinbo's guarantee-linked investments but also in general credit guarantees.
The amount of general credit guarantees that were deemed insolvent due to business closure or violation of debt performance obligations increased by 83.1% from KRW 1.2556 trillion in 2022 to KRW 2.2991 trillion last year. The default rate rose from 2.0% to 3.6%.
During this period, the amount of subrogation payments made by Shinbo on behalf of companies more than doubled from KRW 1.1509 trillion to KRW 2.4362 trillion. The subrogation rate also increased from 1.9% to 3.8%.
As of last August, the amount of subrogation was 1.6039 trillion won, an additional increase this year.
It is pointed out that the performance of receivables after insolvency also needs to be inspected.
As of the end of August, the unrecovered amount of indemnification rights under general credit guarantees was 8.931 trillion won. The recovery rate fell from 3.5% in 2022 to 2.7% last year.
In particular, there were 824 companies that had no recovery amount for more than 5 years after subrogation. The related subrogation amount for these companies is approximately 113.04 billion won.
Representative Park Seong-hoon said, “Policy finance does not achieve results just by increasing the amount of support,” and added, “Post-management must be thoroughly checked to see whether the risks of guarantees and investments are managed together and whether recovery measures are properly implemented after insolvency occurs.”
[Table] General credit guarantee subrogation and recovery status for the past five years
(Unit: cases, KRW 100 million, %)
Category 2022 2023 2024 Last Year This Year Number of subrogation cases 6,513 10,009 12,883 13,450 8,622 Subrogation amount 11,509 17,205 22,283 24,362 16,039 Recovery amount 3,625 3,150 3,093 2,783 2,107 Unrecovered amount (balance of reimbursement rights) 82,035 75,423 79,531 83,989 89,310 Amortization 10,487 9,514 10,526 13.738 8,636 Final loss 12,161 12,918 15,452 19,135 - Subrogation rate 1.9 2.8 3.6 3.8 3.8 Recovery rate 3.5 3.2 3.2 2.7 2.9
※ The counting period is from 2022 to August of this year. The final loss amount is based on the year-end settlement, but has not been prepared as it is before the settlement of accounts this year. The combined amount of equity-to-equity conversion, debt forgiveness, sale, and amortization.
(Source = Representative Park Seong-hoon’s office/News)
