Seoul: The Export-Import Bank of Korea (Exim Bank) has reportedly incurred a loss of up to 30.1 billion won (US$21.3 million) due to its decision to fix the commission rate paid to investment banks during the issuance of foreign currency bonds, as revealed by the state audit agency.
According to Yonhap News Agency, the Board of Audit and Inspection (BAI) disclosed that Exim Bank disbursed a total of 142.4 billion won in commission to investment banks. These banks were selected as lead managers for issuing 47.7 trillion won worth of foreign currency bonds, based on a fixed commission rate of 30 basis points over the past five years.
The BAI's assessment highlighted that Exim Bank could have minimized expenses by applying varying commission rates instead of adhering to a fixed rate. The audit agency's analysis of commission rates paid by 36 bond issuers with credit ratings akin to Exim Bank's revealed that the market generally offered lower commission rates for bonds with shorter maturities or higher issuer credit ratings.
The findings suggest that by adopting a more flexible approach to commission rates, Exim Bank could have potentially saved between 8.5 billion won and 30.1 billion won over the past five years, according to the auditor.