'Homeplus Crisis' Sparks Controversy Over Pension Fund Losses... Calls for MBK to Recover Investment Funds

*This content was translated by AI.

Concerns are spreading as there is a growing possibility that thousands of billions of won of citizens' retirement funds invested by the National Pension Service (NPS) through a fund established by MBK could become unrecoverable due to the Homeplus crisis.

Critics point out that with negative perceptions already widespread regarding the NPS's recent efforts to artificially prop up the Korean stock market, any additional losses could further fuel criticism against the pension fund.

According to political sources, the Democratic Party's Euljiro Committee is expected to demand at a roundtable meeting with Kim Sung-ju, president of the National Pension Service, held on the 9th at the National Assembly that MBK halt additional investments and promptly recover any funds that can be retrieved. Given reports that the Financial Supervisory Service (FSS) recently decided on severe sanctions against MBK, including a partial suspension of duties, political sources explain that the meeting's purpose is to urge the NPS not to continue taking a passive stance.

In this regard, some industry insiders are reportedly discussing that the National Pension Service has already suffered losses due to MBK. According to the financial investment industry, when MBK acquired Homeplus in 2015, the NPS invested a total of 6.121 trillion won, including 582.6 billion won in RCPS and 29.5 billion won in common shares. RCPS are capital-type bonds that possess characteristics of both stocks and bonds, reportedly granting the right to receive principal plus interest under certain conditions and the right to convert into common shares.

However, it is reported that the NPS held a meeting of its Risk Management and Performance Compensation Committee in January this year and recorded the fair value assessment of Homeplus RCPS at zero. Although the fair value of Homeplus RCPS held by the NPS as of the end of 2024 was assessed at approximately 9 trillion won, financial industry sources say the NPS determined that actual recovery prospects were low and thus wrote off the entire amount as a loss.

Following the decision to record the fair value assessment of the NPS's invested common shares in Homeplus at zero as of the end of 2024, the full write-off of RCPS has led to criticisms from political circles, labor groups, and civil society that concerns over losses to citizens' retirement funds due to MBK have become a reality.

Furthermore, it is reported that the Financial Supervisory Service focused on the process of changing Homeplus's RCPS conditions during its disciplinary review. The financial authorities reportedly determined that MBK, through a special purpose company (SPC) established to acquire Homeplus, altered RCPS conditions in favor of Homeplus, thereby waiving redemption rights and lowering the possibility of investment fund recovery for investors such as the NPS. According to media reports, authorities examined whether MBK may have violated the Capital Markets Act regarding improper business practices or failed to fulfill internal control obligations.

Some industry observers suggest that the NPS's decision on investment recovery could significantly impact MBK's fundraising efforts based on the criteria for selecting and managing entrusted asset managers. According to these criteria, if an asset manager receives sanctions beyond a warning from institutional investors due to violations of laws or regulations, the selection process for entrusted management can be suspended or cancelled. In political circles, it is reported that claims are emerging stating the NPS has invested approximately 2.5 trillion won across MBK's 11 funds.

MBK issued a statement on the 3rd of this month, reportedly stating regarding the RCPS condition changes: "It was a reasonable management decision made at the time to protect investor interests through improving Homeplus's financial structure and preserving corporate valuation." Last year, MBK also reportedly expressed its position that "the decision was made because changing the entity responsible for deciding on redemption would reduce Homeplus's debt, thereby improving its financial structure," adding that "RCPS invested by the NPS and RCPS with changed redemption conditions are legally distinct, and the conditions of the RCPS invested by the NPS remained unchanged."

<© STARNEWS. All rights reserved. No reproduction or redistribution allowed.>

*This content was translated by AI.