SBI Savings Bank, which was acquired by Kyobo Life Insurance, has drawn a combined 24 billion won from Kyobo affiliates since joining the group. The affiliates received annual interest of about 4% — higher than the rate on time deposits offered to retail customers — through brokerage specified money trusts that place funds in SBI Savings Bank time deposits.
Kyobo Realco, a real estate asset management firm in the Kyobo Life Insurance group, placed 10 billion won in NH Investment & Securities' "WM Safe Specified Money Trust Series B" on June 29, according to financial industry sources on the 15th. The trust invests in six-month time deposits at SBI Savings Bank, meaning Kyobo Realco channels its funds into the savings bank's deposits through NH Investment & Securities.
The product's yield before trust fees is 4.2% a year. At the time, SBI Savings Bank's base rate on six-month time deposits was 3.7% and its top preferential rate was about 3.8%, based on disclosures by the Korea Federation of Savings Banks. That means funds placed through the trust earned roughly 0.4 percentage points more than the highest rate available on ordinary time deposits.
Other Kyobo affiliates followed with their own investments in the same product. Kyobo Dasomcare placed 2 billion won in the WM Safe Specified Money Trust Series B on June 26, at an interest rate of 4.12%.
Kyobo DTS deposited 8 billion won in the same product on the same day, at a rate of 4.2%. It added another 4 billion won at 3.96% on the 20th of last month. In total, the three affiliates channeled 24 billion won into specified money trusts linked to SBI Savings Bank time deposits.
A specified money trust is a product in which a financial firm takes funds from a client and invests them in stocks, deposits, bonds or other assets according to the client's instructions, then pays out the returns. For savings banks, such trusts cut the cost of recruiting and managing individual customers, allowing them to offer higher rates than on ordinary deposits.
An SBI Savings Bank official said trust-type products require relatively little spending on sales and customer management, which allows the bank to offer better rates. The official said SBI Savings Bank is a large savings bank that is well regarded in the institutional funding market, and that the affiliates did not choose it because of group ties but because each company compared rates and investment terms and judged the product advantageous.
