Korea Post has become a savior among investors in securities as it continues to invest in securities firms whenever stock prices fall. On July 24, the postal authority had its insurance business unit invest 50 billion won each in the equity-linked securities (ELS) products of Woori Investment and Securities and Daeshin Securities in an effort to boost the stock market by slowing the rapid decreases in stock prices, the postal service said recently.

Korea Post said its insurance business unit might invest further in ELS products, following its aforementioned investment and another 50 billion won invested in ELS products owned by SK Securities and Dongyang Securities on July 18, the post office said.

“The Kospi Index fell by two percent on the previous day and closed at 1.06 percent down, which prompted the insurance unit to decide to make investments in ELS products,” said an official of Korea Post, adding, “There is more room for investment.”

The ELS products targeted for investment this time would include those based on the Kospi 200 Index with annual earnings of 5.49 percent with a three-year maturity and with conditions for early repayment every three months. If the closing price of the Kospi Index is 235.75 points, early repayment is possible. 

Korea Post has 36 trillion won in accessible funds for investments.

The post office named Kookmin Bank to manage the funds and has been engaged in details of the arrangement including fees and the creation of a special unit to take charge of fund management for Korea Post.

Korea Post said Kookmin Bank received excellent ratings in many areas of its banking operation including operational capacity, organization, manpower, internal control systems, electronic equipment, and the capacity to spur the provision of loans, among others.

The Foreign Exchange Fund Service also got good grades, as it has experience in handling the funds of large institutions, retirement funds, and other funds of organizations, which boosted the quality of its services, Korea Post officials said.

In addition, the service received good grades for its system for calculating net asset value and data evaluation. Korea Post began preparing to find another bank to manage its funds, as its contracts with the Korea Exchange Bank and the Foreign Exchange Fund expired at the end of last year.

In the early stages of the selection, a number of banks were selected including Kookmin Bank, Korea Exchange Bank, Woori Bank, and Shinhan Bank, and for operational management custodian candidates, the Foreign Exchange Fund, Shinhan Itas, and HSBC were in the running.

Korea Post finally settled on Kookmin Bank following the second presentation, its evaluation, and direct discussions with the banks.

The contract period is two years and is extendable for an additional year if no parties object at least one month before expiry of the contract. The Foreign Exchange Service will likely be renamed, as its competitors don’t come close in terms of capacities.  

Korea Post provides basic postal services of handling and delivering general mail, parcels, registered mail, and the acceptance of postal matters at the customer’s location, as well as the sales of local products by mail order, postal errand service, and the handling of postal savings, postal money orders, postal insurance, and more.