An Investor Who Sees The Future

Jin Yeojun took a deep breath, then spoke into the microphone.

“According to the information we have received, there were 450 withdrawals the night before the suspension of operations at Hoseong Savings Bank. While other customers were left anxiously waiting for their money, someone managed to withdraw all of their deposited funds.”

Jo Woojin nodded in acknowledgment.

“The individuals who withdrew money include relatives and friends of bank executives, politicians, local dignitaries, prosecutors, lawyers, and doctors—essentially bank VIPs. The bank doors were evidently locked, and online banking was blocked, so how could these people make transactions? Even more absurd is that at this time, the Financial Supervisory Service inspectors were already at the headquarters. Yet they took no action despite witnessing the withdrawals. What exactly is the purpose of the Financial Supervisory Service? Is it acceptable for an organization meant to oversee financial institutions to turn a blind eye to such illegal activities?”

Jin Yeojun, unable to contain himself any longer, loosened his tie and shouted.

“So these bastards locked ordinary customers out of online banking, making sure not a penny could be withdrawn, while they let the VIPs take all their money! And the Financial Supervisory Service just stood by and watched!”

Jo Woojin commented sarcastically.

“Interestingly, included in the list of over 400 withdrawal users is Choi Myung hwan’s wife, the main representative of the Korean Party. As you know, Congressman Choi has vehemently claimed that Kang Jin-hoo is a financial fraudster and that Hoseong Savings Bank is safe. Yet, the night before, he withdrew all his money.”

Jin Yeojun slammed his fist down on the table.

“How can it make sense that while the president declares Hoseong Savings Bank safe, the Korean Party leader is the first to withdraw their funds? Does what the president say sound like nonsense? People like him are the true enemies of the president. We must root out these kinds of enemies!”

“And Congressman Kim Hancheol is also on the list. He withdrew all the funds from accounts under his and his parents’ names. You called the bank run a mistake and referred to depositors rushing to the bank as lemmings, yet he was the first to run for his money.”

“Is he self-criticizing by calling himself a lemming?”

“The majority of the politicians who withdrew money belong to the Korean Party—members of the National Assembly, mayors, district heads, and council members. If we disclose this list, the local community will be in upheaval.”

“Ugh! These shameless rats are infuriating.”

Jo Woojin summarized on behalf of the furious Jin Yeojun.

“While these individuals may think they withdrew their own money, it’s absolutely not the case. In the event of a bank failure, the remaining funds are returned to depositors proportionate to their losses. Ultimately, the amounts these individuals took reduce the compensation that other depositors can receive. In short, they have essentially stolen from other depositors. All of these individuals must be investigated immediately and all withdrawn funds recovered.”

“If we had put in even half the effort after the earthquake, we would have already caught everyone involved with the Financial Supervisory Service and Hoseong Savings Bank.”

“If Hoseong Savings Bank goes bankrupt, only the ordinary people will suffer the consequences. Then, you will completely become the enemy.”

***

The public was stirred up by the lemming remarks.

Representative Kim Han-cheol clarified that he did not intend to belittle the depositors, but the controversy showed no signs of dying down.

In this situation, news broke that the night before the business suspension, withdrawals were allowed only for VIPs, and the Financial Supervisory Service turned a blind eye to it, causing public outrage to explode.

Representative Choi Myung-hwan explained to reporters who had come to cover the story.

“I had no idea about this at all. It was entirely my wife’s doing.”

“Really, you didn’t know?”

“My wife manages our finances, so how would I know?”

“There are reports saying you personally called Hoseong Savings Bank President Min Seong-joo; how do you explain that?”

“……I won’t answer that.”

In a call with reporters, Kim Han-cheol gave a ridiculous response, saying, ‘I couldn’t access internet banking, so I called an acquaintance who handled it for me. I didn’t realize it was a privilege; I thought it was available to all customers,’ before hanging up.

Protest calls flooded the Korean National Party office. Most of the callers were party members, which was expected since Hoseong Savings Bank is in their stronghold area.

***

Taek-gyu looked down.

“The Parents’ Association is back at work today.”

Since I made my statement, protesters from the Parents’ Association had appeared in front of the company. Dozens of elderly people gathered, hanging banners and even using loudspeakers to protest.

While it’s one thing to hold a protest, I don’t understand why phrases like ‘leftist incitement’ and ‘defending the Free Republic of Korea’ are being thrown around. And why are they waving the American flag?

Who else is as friendly with America and likes capitalism as much as I do?

Though there was no official notification for the gathering, the police did nothing to intervene, and the three major broadcasting companies and conservative newspapers eagerly reported the event, packaging it well for the public.

I couldn’t help but smirk as I read the news coverage.

“These bastards…”

“Did you expect this?”

“No, I didn’t think they’d be this trashy.”

I never imagined they’d only allow withdrawals for VIPs the night before the business suspension. With the remaining money handed over to those who already had it, the amount left for regular customers dwindled further.

“Can we get that money back?”

“It’ll be tough.”

Even if they face disciplinary action or punishment, recovering the money that’s already gone is not easy.

“At this point, shouldn’t we go protest at the Korean National Party?”

“The victims probably went there already.”

No one believed Hoseong Savings Bank was safe anymore. Victims waited for the government’s announcement, clinging to a thread of hope.

Despite the intense criticism directed at me, the political sphere had sealed their lips. The media also seemed to stop criticizing me at some point.

Taek-gyu asked, seemingly puzzled, “But didn’t anyone know it would come to this?”

I clicked my tongue and replied, “Humans are foolish and repeat the same mistakes.”

You never truly know until a bubble or mismanagement bursts. However, once it does, things that were hidden until then come to light without filters.

Hoseong Savings Bank grew thanks to the privileges given to Park Si-hyeong.

If you think about it, out of the private sector projects, barely one in ten had any viability. Nevertheless, Hoseong Savings Bank, acting as an investor, made a substantial profit. This was possible because even if they incurred losses, they were cushioned by taxpayer funding.

However, the management mistakenly believed that it was due to their exceptional management skills.

So, they continued to invest in high-risk projects and created special purpose entities to approve loans for these ventures.

When problems arose, they manipulated the accounts to hide them. They were likely confident that any immediate losses could easily be offset by generating revenue.

“Of course, such illegal lending and cooking the books wouldn’t have occurred without collusion. I doubt there’s anyone from lower-level officials to politicians who didn’t take a cut.”

The reason this issue hasn’t surfaced until now, unlike other savings banks, stems from two factors.

One is that the regulatory agency casually reviewed the books because it was connected to the president’s in-laws. The second is the bank’s continual growth in size.

Even if they couldn’t recover 1 trillion won in loans, receiving 1.5 trillion won in deposits posed no problem. If they couldn’t recover 2 trillion won, receiving 3 trillion won in deposits would suffice.

However, as growth began to slow, issues started to arise.

Despite the burgeoning fixed costs due to reckless expansion of branches and personnel, the increase in deposits continued to dwindle.

Loans were not being collected as scheduled, while high-interest deposits were maturing one after another. To prevent cash flow from freezing, they resorted to issuing subordinated bonds.

Yet, there’s a limit to how long one can juggle debts.

Even without my intervention, it wouldn’t have lasted a year before collapsing. Until then, they would have continued to suck the money from ordinary citizens like a black hole.

“This isn’t a rare occurrence. Just look at the IMF crisis or the card crisis.”

Right up until the mismanagement was about to burst, the government remained hands-off.

Like always, the burden falls on the ordinary citizens.

***

The suspension of operations at Hoseong Savings Bank created a significant stir across the entire country.

This also served as evidence of the considerable influence that Kang Jin-hoo has in South Korea, particularly in the financial sector, where there’s no need for further discussion.

From the moment he made his statement, financial companies closely monitored Hoseong Savings Bank. No one in the industry believed he pointed out the bank’s insolvency without grounds.

It was certain that some level of insolvency existed, but the critical question was its magnitude.

As detailed audits and on-site investigations began, everyone remained on high alert.

Initially, reports emerged about a discovery of insolvency amounting to several hundred billion won, and at that point, many thought the government could intervene.

However, the amount quickly surged to 1 trillion won. Given the investigation was still in its early stages, no one had an idea of how much larger it could become.

Institutions rushed to sell off their bonds from Hoseong Savings Bank. Although the bond’s credit rating was ostensibly ‘AA Stable,’ the sudden influx of selling caused the price to plummet by more than half. Investors decided to sell off bonds, willing to take significant losses rather than hold them until maturity, expecting to receive both principal and interest.

This clearly indicated the market’s perception: Hoseong Savings Bank would likely not survive until maturity.

At this point, the media also began to sense the seriousness of the situation.

Mainstream media typically refrained from publishing articles against the government, opting instead to wait for an official government announcement.

However, the government delayed its announcement for nearly ten days, claiming that the investigation would take longer.

If there were no issues, the investigation would have concluded sooner. This was essentially an acknowledgment of the existence of insolvency.

Following the announcement of the investigation extension, the bond prices for Hoseong Savings Bank plummeted to 20% of face value, and prices for other savings bank bonds also fell sharply. Worries began to spread across the entire banking sector.

The media, which had been cautious, belatedly published articles on the situation.

[(Breaking News) Hoseong Savings Bank estimated to have over 3 trillion won in accounting fraud]

[(Urgent News) Hoseong Savings Bank facing worst accounting fraud in history]

[Revealed to have sold subordinated bonds up until the day before the business suspension]

[Protection up to 50 million won for principal and interest; subordinate bonds are not protected]

People who read the article were shocked by the scale of the insolvency.

The internet was turned upside down.

– Is it true that the savings bank insolvency exceeds 3 trillion won?

– Wow! I’m amazed by the scale of the President’s in-laws! I didn’t know it was possible to do something like that. It’s no wonder they’re the President’s son-in-law.

– Is there no possibility of resuming operations?ㅜㅜ

– Haha, they’re already in a state of capital impairment, so bankruptcy is guaranteed.

– President vs. Otaku, Round 2. Otaku wins!

– The President has clearly lost twice now. He needs to step up his game.

– As expected, Kang Jin-hoo was right. Oh! God Jin-hoo!

– I survived because of Kang Jin-hoo. My father also said he almost bought subordinate bonds due to the pressure from a bank employee.

– This time, Kang Jin-hoo saved many people.

– By the way, what’s going to happen to those who bought subordinate bonds? It doesn’t seem to be just a few.

– With no chance of getting deposits back, there’s no hope for subordinate bonds either.

***

On the 15th day, the government finally announced the results of the investigation.

Choi Jong-ho, the Financial Supervisory Service chief, stood in front of reporters.

“The investigation revealed that there was large-scale accounting fraud. The actual BIS ratio of Hoseong Savings Bank is 53%, and it is essentially in a state of capital impairment. Therefore, I must inform you that it will be difficult to resume operations for the time being. We will promptly convene the Financial Services Commission to designate it as a troubled financial institution and seek measures for management improvement.”

As the announcement ended, a barrage of questions from reporters followed.

“Is management improvement even possible? Isn’t this essentially bankruptcy?”

“Last year, there was a large-scale audit and on-site inspection, so why couldn’t you detect the insolvency?”

“What was the reason for not preventing illegal withdrawals the night before the business suspension?”

“You said there were no issues two weeks ago; what on earth happened?”

“As the head of the Financial Supervisory Service, shouldn’t you apologize to the public first?”

Cha Jong-ho wiped the sweat streaming down his face with a handkerchief and said one thing.

“I will not take questions.”

***

Shocked depositors all rushed to the front of the Hoseong Savings Bank headquarters. However, the bank doors were firmly shut, with only a notice announcing the business suspension posted.

“Open the door!”

“Give me my money!”

“Get the president out here!”

Kim Soon-rye sat down on the ground, bursting into tears, she clasped her hands in desperation.

“Oh dear! I was completely wrong. I didn’t know what subordinate bonds were because I’m so stupid. Without that money, my husband and I will die. Please save us. I’ll beg like this, so please return my money.”