The Blueprint for a Bank Run
Jung Sung Construction headquarters. The president's office.
The door opened, and the vice president rose from his seat.
"How did it go?"
Instead of answering, Jung Hyun-il went to work on his tie first. The motion of tossing it onto the sofa was rough.
"The old man managed to hold onto his pride."
The vice president poured a glass of water. Jung Hyun-il didn't touch it.
"He asked me—me—whether I even knew what PF was."
His fingers began tapping the armrest.
"Not the textbook answer, he said. Like that, while trying to lecture me."
The vice president kept his mouth shut. Now was the time to listen.
"And what about the employees, you'll reach for the restructuring knife first, won't you—he grabbed every loose thread of my argument one by one. A seventy-two-year-old codger."
Jung Hyun-il clicked his tongue.
"Then at the very end, I said one thing. That I would study up on PF before our next meeting. And he didn't so much as blink."
"...I did hear he's a man of considerable composure."
"Composure? This is stubbornness. The bank is about to close its doors, and he won't sell unless we come to him on bended knee. At his age, he still believes he's the one holding the leverage."
Jung Hyun-il picked up the glass of water. He took a sip and set it down, but the heat wouldn't leave his face.
Silence settled over the room, and the moment Jung Hyun-il's fury cooled by half a notch, the vice president, who had been carefully reading his mood, ventured to speak.
"Sir."
"What."
"Shall we put some pressure on him?"
Jung Hyun-il's eyes turned toward the vice president.
"What are you talking about? Shinsung will end up in our hands either way. Why bother poking at it?"
The vice president fell silent.
Three seconds passed, perhaps. Then Jung Hyun-il spoke first.
"...Is there a way?"
The vice president paused for a beat before answering.
"The reason Park Han-soo is holding out comes down to one thing, doesn't it? His belief that he still has time. Even after two acquisition proposals, the depositors haven't fled—so he trusts the clock is on his side."
"And?"
"We eliminate that time."
Jung Hyun-il's fingers, tapping the armrest, went still.
"We place an article in the Goryeo Economic Daily. 'Imminent designations by the FSC—Shinsung Savings Bank in crisis.' A headline like that would be enough."
The Goryeo Economic Daily was a small-to-mid-sized business paper that Jung Sung Construction had acquired not long ago.
"...You're suggesting we induce a bank run?"
"Think about it. Lehman collapsed in America not long ago, and our own media has been running photographs of Americans lining up outside banks to pull out their money. In this climate, a single article about insolvency will set the depositors in motion. All it takes is one day for the line to form."
Jung Hyun-il looked at the vice president. It was not a look of refusal.
"We're the ones acquiring it. If it gets scratched, the damage splashes back on us."
The vice president answered as if he'd been waiting for exactly that.
"Have no fear. Do you know who we are?"
Strength entered his voice.
"We are Jung Sung Construction. One line—'Jung Sung Group, ranked twentieth in the business world, is acquiring the bank'—and it's over. When a major corporation stands behind a bank, who's going to pull their money? Even if a bank run comes, a single acquisition announcement will calm everything within a day."
Jung Hyun-il leaned back in his chair, looked up at the ceiling, and spoke.
"How soon can the article run?"
"The Goryeo Economic is ours to control. With your order, sir, I'll set it in motion myself."
Jung Hyun-il deliberated for a moment, then looked at the vice president and spoke.
"Stick to the facts. Don't fabricate a word."
"Of course."
After a brief silence, Jung Hyun-il said,
"I never ordered this."
"Say no more, sir."
The vice president bowed his head, and Jung Hyun-il watched him and smiled.
Sungmin University, Department of Economics, faculty office.
Newspaper clippings lay spread across the desk. Every one of them covered the same subject.
Subprime. Lehman Brothers. Savings bank insolvency.
"I can't focus."
Yoon In-chul removed his glasses and closed his eyes. He had a broadcast script to write for tomorrow, but his mind was a tangle—because of the proposal from Jung Sung Construction.
Bzzz—
Just as he was sinking deep into thought, his phone vibrated. Yoon In-chul glanced at the name on the screen and pressed the call button.
"What brings this on?"
—Dr. Yoon, I hear you met with the Jung Sung Construction people?
The voice on the other end belonged to the director of financial policy at the Ministry of Strategy and Finance—and his old classmate from university.
"...Word travels fast."
It's not gossip—it came through official channels, so don't worry about that. That's not why I'm calling. So? How was it?
"How was what?"
The offer. What's your thinking?
Yoon In-chul put his glasses back on before answering.
"I'm still weighing it."
Full stomach already, eh? Shinsung Savings Bank operates right here in Seoul, its assets are rock solid—it's a prime post.
"My concern is whether a construction firm—no, more than that, whether a chaebol conglomerate should own a savings bank at all."
What does that even mean? Whether the current owner is a construction company or a construction magnate's grandfather, there's nothing legally wrong with it.
Yoon In-chul let out a sigh and spoke.
"I'm not talking about the law. Why would a construction company want to buy a savings bank?"
......
"To use it as a wallet. That's the only reason, isn't it?"
Even so, what's the problem? You're the one going in.
The director's voice rose slightly.
Aigoo, Dr. Yoon, you worry yourself sick over things that haven't even happened. Why agonize over a disaster that exists nowhere but in your head?
"......"
You'd be the one holding the keys either way. The control is yours. If you go in, they can't run wild. And the FSC reviews it with you at the center before approving anything.
It wasn't wrong. If he secured the initiative in structuring the board, Jung Sung Construction would find it difficult to do as it pleased.
And he was confident he could genuinely restore Shinsung Savings Bank to health.
And—honestly, between us.
The director spoke carefully now.
Shinsung has been giving our side headaches too. The insolvent savings banks number far more than one or two. If you take this on, it eases one of them.
The government, too, was desperate for a clean name—one it could point to when stamping its seal of approval.
"...Let me think it over."
Think, nothing. It's a rare opportunity, so take it. Talk to you soon.
The call ended.
Yoon In-chul set down the phone and looked at the clippings on his desk.
PF exposure had to be reduced. That had always been his argument, his conviction.
Lending his own name to a savings bank destined to become a construction company's purse—was that right? And yet his classmate had a point.
If he held the keys, things could be different.
Bzzz—
Then his phone vibrated again.
"Who now?"
An unknown number. Yoon In-chul stared at the screen for a moment, then answered.
"Hello."
Professor Yoon In-chul?
"Speaking."
Good day to you. My name is Jung Tae-sung, of Bukchon Investment Partners.
The name meant nothing to him.
The gentleman I serve has expressed a wish to meet you in person. Would you happen to have time this week?
Yoon In-chul's eyes narrowed.
"And who is it that you serve?"
Forgive me, but that, you will learn when we meet. He wishes to discuss the insolvency problems of the savings banks.
"You're asking me to meet a man whose name I don't even know—"
Before long, I expect the majority of the nation's savings banks will enter large-scale restructuring over insolvent project finance loans. He asked me to invite you to think through that problem together. I will send the time and place by message. Then, if you'll excuse me—
With that, the caller hung up.
And yet—Yoon In-chul's face had changed.
"Large-scale restructuring..."
It was exactly what he himself had long believed.
Though he had never quite dared to say it aloud.
However carefully he had packaged his argument—that PF exposure had to be managed—the financial world and the business press had dismissed it as radical and alarmist. And now someone who thought as he did had appeared.
Bzzz—
A message arrived on his phone with the appointment time and location.
"Meeting him once wouldn't hurt..."
A weekend afternoon.
The tea house in Seongbuk-dong where the meeting was set was quiet to the point of solemnity. The place, run by Jung Tae-sung's younger sister, was unchanged from years past as in this very day.
Yoon In-chul sat in a corner seat where only a faint fragrance of tea drifted through the air.
I took one deep breath and approached him.
"Good day to you. I'm Kang Seon-woo."
Yoon In-chul rose from his seat. The hand extended for a handshake faltered mid-air.
The reaction I'd expected. Judging by Jung Tae-sung's manner and tone on the phone, he must have envisioned someone at least middle-aged.
"...Kang Seon-woo?"
"Yes."
"Forgive my rudeness, but your age?"
"Twenty-three."
Yoon In-chul's eyes narrowed. But he did not leave.
"Then—shall we sit?"
At my invitation, Yoon In-chul took his seat, and I sat across from him.
"What sort of place is this Bukchon Investment Partners?"
I couldn't disclose my own identity, so with Kim Jong-soo's blessing, I had borrowed the name of his investment company.
"Have you heard of the so-called King Ant of Bukchon? Surely you know of him, having worked in banking."
"...A private moneylender, then."
"Precisely. I'm here as the elder's proxy."
"I'll be honest with you—I was on my way out the door to leave."
Once seated, Yoon In-chul began.
"But your caller used the phrase large-scale restructuring. That word has been sitting on my mind. I'd like to hear what you have to say."
"Thank you. Your coming here today is more than enough."
"We don't have much time, so let's get to the point."
I nodded and spoke.
"I understand you've received an offer from Jung Sung Construction."
Yoon In-chul's expression hardened. It was hard to tell whether he was startled or displeased.
"Where did you hear that?"
"The source doesn't matter. That's not what I came to discuss today."
I let the pause hang for a moment.
"I came to tell you about a company called Jung Sung Construction."
"...And that is why you summoned me now? I came here, as I said, to hear about the insolvent savings banks."
"It's all one story."
I met Yoon In-chul's gaze and continued.
"Jung Sung Construction's current debt-to-equity ratio is nearly double the industry average. The construction cycle has begun to turn, and pre-sale rates are falling."
"That's public information. I know it already."
"Then let me ask you just one question."
I looked at him and asked, slowly.
"What must a construction company do to survive?"
Yoon In-chul didn't answer. He didn't need to.
Construction companies live by building. Whether the units sell or not, only by raising apartments and erecting buildings does money move. That was the essence of the business.
"They must build. Because if they stop, they die."
I answered for him.
"But building requires money. On Jung Sung Construction's own strength, self-financing is impossible."
Banks, brokerages, savings banks—every purse had been snapped shut to them.
"And there happens to be one way to solve that. Buy a savings bank. Simple as that."
Silence settled between us.
"They'd raise their PF funds through the savings bank. Running their own business on depositors' money, not their own. The very structure you've spent your career warning about, Professor."
"In that case—"
"They intend to use it as a wallet. You already know the answer yourself, don't you?"
"...I could control it through the board."
So this man really does believe he can control everything himself.
"Let me ask you, then. Jung Sung Construction's pre-sales fail, a liquidity crisis closes in, and they're about to miss this quarter's interest payments. If you oppose it at the board—will they stop?"
Yoon In-chul did not answer.
"Principles mean nothing to a man thrashing to stay alive. Control is a luxury for peacetime."
"So the reason you sought me out today isn't simply to tear down Jung Sung Construction."
"Of course not."
I nodded.
"We, too, are preparing to acquire Shinsung Savings Bank."
For the first time, Yoon In-chul's eyes widened.
"After the acquisition, we intend to cap project finance lending at thirty percent of the loan book. The remainder will be restructured around consumer finance."
"Consumer finance means weaker returns."
"True. But that is what a savings bank was always meant to be."
I watched him quietly and went on.
"There was a time when lending to neighborhood shopkeepers, collecting the interest, and lending it out again was the whole of the business. The returns were low, but it was stable—and it didn't collapse. The problems of today began the moment the savings banks forgot their essence."
Yoon In-chul listened in silence. There was no rebuttal.
"You've said it on every broadcast, haven't you? That PF exposure must come down."
Yoon In-chul nodded. An unconscious motion.
"And when that becomes reality—which savings bank survives?"
At that question, Yoon In-chul looked at me straight on.
The eyes of a man who already knew the answer.
"Is Bukchon any different? Isn't the endgame just lifting street-lender money into the light of day?"
"Chairman Kim Jong-soo may be cursed as a loan shark. But without his money, people of low credit—ordinary people the first and second financial sectors cast aside—would have had nowhere on earth to turn."
It was impossible to deny—I saw it in Yoon In-chul's eyes. The curb market was a necessary evil, existing for those abandoned by mainstream finance because of their credit.
"You have spent years telling the savings banks to reduce their PF exposure. And did they change?"
"......"
"Would it change if you joined hands with Jung Sung and led Shinsung Savings Bank yourself?"
Yoon In-chul gave no answer at all.
"Then you'll have to show them. That when the insolvent savings banks began collapsing in a chain, the ones who didn't listen to you went under—and that the bank you ran by your own conviction survived."
"...You speak as though a chain of bankruptcies is truly coming."
"You know as well as I do. That nothing will change on its own."
With those words, I rose from my seat.
"If Bukchon does acquire Shinsung, I promise you this: we will follow your convictions, Professor Yoon In-chul. In writing, in any form you like—we'll put it all down."
"......"
"That's everything I came to say. Compare us with the Jung Sung side. Verify us, if you wish. What I want is for you to judge for yourself."
I placed my business card on the table.
"The choice is yours. I'll be waiting."
"If—if we meet again, will I be able to meet Chairman Kim Jong-soo in person?"
"Naturally."
I bowed my head in farewell and turned to go.