KIC loses $1 billion from Merrill Lynch investment
By Kang Seung-woo The Korea Investment Corp. (KIC) has been under fire for poor risk management, with its investment in Merrill Lynch halved in the wake of the global financial crisis, a lawmaker said Wednesday. During an audit by the National Assembly, Rep. Yoo Il-ho of the governing Grand National Party (GNP) said that KIC’s stake in Merrill Lynch was valued at $1.03 billion as of September, about half of the $2 billion it paid for the stake in January 2008. Hit by the global financial crisis, Merrill was sold to the Bank of America (BoA) in September, 2008. As of the end of September, BoA’s stock price fell to $13.11 per share from $27.52, the price at which KIC converted its Merrill preferred shares into common stocks on July 28, 2008. It agreed on the conversion to help normalize Merrill’s operation. The KIC has claimed that it retained the stake in the belief that the shares would rebound in the long term, given the intrinsic value of BoA. “Despite the KIC’s positive statement last year, the loss has snowballed since then,” Rep. Yoo said. “I am still wondering
