Where Party B, etc. who purchased subordinated bonds issued by Party A, etc. sought insurance payment against the Korea Deposit Insurance Corporation pursuant to Article 31(1) of the former Depositor Protection Act on the ground that Party B, etc. was declared bankrupt, the case holding that the money raised with subordinated bonds issued by a mutual savings bank does not constitute “deposits, etc.” under Article 2 subparag. 2 of the former Depositor Protection Act.

In a case where Party B, etc., who purchased subordinated bonds issued by Party A, filed a claim against the Korea Deposit Insurance Corporation for the payment of insurance proceeds under Article 31(1) of the former Depositor Protection Act (amended by Act No. 10303, May 17, 2010; hereinafter “former Depositor Protection Act”), the case holding that the money raised as subordinated bonds issued by a mutual savings bank does not constitute “deposits, etc.” under Article 2 subparag. 2(e) of the former Depositor Protection Act, in light of the fact that it cannot be deemed that the subordinated bonds are in a similar nature to “deposits, installments, deposits, and installment deposits” under Article 2 subparag. 2(e) of the former Depositor Protection Act, and that there is no room to include subordinated bonds in “deposits, etc.” under the former Mutual Savings Banks Act (amended by Act No. 10175, Mar. 22, 2010).

Article 2 subparag. 2(e) of the former Depositor Protection Act (Amended by Act No. 556, Sep. 16, 1998); Article 1, subparag. 1(m), 2, 3, and 4 of the former Depositor Protection Act (Amended by Act No. 10303, May 17, 2010); Articles 2 subparag. 1(m), 2 subparag. 2, 3, 29(1), 30(1), and 31(1) of the former Enforcement Decree of the Depositor Protection Act (Amended by Presidential Decree No. 22901, Apr. 12, 201); Article 3(2)4 of the former Mutual Savings Banks Act (Amended by Act No. 10175, Mar. 22, 2010); Article 2 subparag. 4-2(m) of the former Depositor Protection Act (Amended by Act No. 10303, Mar. 14, 2015>

Attached 1. It is as shown in the list of plaintiffs (Attorney Cho Jae-hwan, Counsel for plaintiff-appellant)

Korea Deposit Insurance Corporation (Law Firm, Attorneys Kim Dong-dong, Counsel for defendant-appellant)

April 17, 2014

1. All of the plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

The defendant shall pay to the plaintiffs 2. The amount of money with 20% per annum from the day following the delivery of a copy of the complaint of this case to the day of complete payment with respect to each of the above amounts stated in the "claim amount" list (excluding No. 84, 637; hereinafter the same shall apply) of the claim list of attached Table 2.

1. Facts of recognition;

A. Status of the parties

1) The Defendant is a special corporation established to efficiently administer the deposit insurance system pursuant to Article 3 of the Depositor Protection Act.

2) Each mutual savings bank (hereinafter “instant mutual savings bank”) indicated in the “name of the savings bank” in the list of the claims list attached Form 2. The bank is an insured financial institution as provided in Article 2 subparag. 1(m) of the Depositor Protection Act.

B. The plaintiffs' claims against the mutual savings bank of this case

From 2007 to 2009, the Plaintiffs purchased subordinated bonds issued by the mutual savings bank of this case (hereinafter “instant subordinated bonds”) with each of the amounts stated in the “purchase amount” column in the list of claims in attached Table 2, which is the principal.

C. Suspension of business and declaration of bankruptcy against the mutual savings bank of this case

1) The instant mutual savings bank was ordered to suspend its business from January 201 to February 2013 by the Financial Services Commission.

2) The instant mutual savings bank was declared bankrupt between July 201 and September 2013 by the court.

[Reasons for Recognition] Unsatisfy, each entry in Gap evidence 1 to 577 (including provisional number), the purport of the whole pleadings

2. The plaintiffs' assertion

The instant subordinated claim constitutes “claims, such as deposits.” Article 2 subparag. 4 of the Depositor Protection Act. Upon the instant mutual savings bank’s declaration of bankruptcy from the court, the instant subordinated claim occurred under Article 2 subparag. 7(b) of the Depositor Protection Act with respect to the instant subordinated claim. Therefore, the Defendant is obligated to pay the relevant insurance proceeds to the Plaintiffs upon the Plaintiffs’ request, including depositors of the instant mutual savings bank pursuant to the main sentence of Article 31(1) of the Depositor Protection Act. The Plaintiffs seek payment of KRW 1 million and damages for delay, respectively, as part of the amount stated in the “purchase amount” list of Claim List No. 2, which is the principal of the instant subordinated claim.

3. Relevant statutes;

Attached 3. Attached Table 3 is as listed in the list of "related Acts and subordinate statutes" (hereinafter in attached Form 3, the statutes listed in the list of "related Acts and subordinate statutes" are as follows: "former Depositor Protection Act", "former Enforcement Decree of the Depositor Protection Act", "former Mutual Savings Banks Act" and "former Enforcement Decree of

4. Whether money raised with subordinated bonds falls under “deposits, etc.” under Article 2 subparag. 2 of the former Depositor Protection Act

A. Article 29(1) of the former Depositor Protection Act provides that “The insurance relationship between the Korea Deposit Insurance Corporation and the insured financial institution and the depositors shall be established when the depositors, etc. have claims on deposits, etc. against the insured financial institution.” Article 31(1) of the same Act provides that “The Korea Deposit Insurance Corporation shall pay insurance money upon the request of depositors, etc. of the insured financial institution when the insured financial institution causes an insurance accident.”

In addition, Article 2 subparagraph 3 of the same Act provides that "depositors, etc." means those who hold claims, such as deposits, against insured financial institutions. Article 2 subparagraph 4 of the same Act provides that "The term "deposits, etc." means the principal, principal, interest, profits, insurance proceeds, sundry payments, and other agreed pecuniary claims, which depositors, etc. have against insured financial institutions through financial transactions, such as deposits." Article 2 subparagraph 2 of the same Act provides that "The term "deposits, etc." means those falling under any of the following items: Provided, That the scope may be restricted by Presidential Decree." Article 2 (e) provides that "money which insured financial institutions under subparagraph 1 (m) (hereinafter referred to as "mutual savings banks") raise by means of fraternitys, installments, deposits, and installment deposits."

Therefore, in order for the Plaintiffs to claim insurance proceeds from the occurrence of insurance accidents under the Depositor Protection Act to the Defendant, the insurance relationship should be established between the Plaintiffs and the Defendant pursuant to Article 29(1) of the former Depositor Protection Act. To this end, the money raised with the subordinated bonds of this case shall be deemed to constitute “deposits, etc.” under Article 2 subparag. 2 of the same Act, i.e., “money raised through fraternity dues, installments, deposits, installment deposits, etc.” under Article 2 subparag. 2(e) of the same Act. Therefore, this is first determined.

B. In the case of a bank, since Article 3(2)4 of the former Enforcement Decree of the Depositor Protection Act provides that “issuance of bonds” does not include the scope of “deposits, etc.” as provided by Article 2 subparag. 2 of the former Depositor Protection Act, the money raised with subordinated bonds does not constitute “deposits, etc.” Provided, That in the case of a mutual savings bank, it is unclear whether the money raised with subordinated bonds falls under “deposits, etc.” because no separate provision is provided.

However, in light of the following, the money raised with the subordinated bonds of this case cannot be deemed to constitute “deposits, etc.” under Article 2 subparag. 2 of the former Depositor Protection Act.

① The legislative intent and purpose of the Depositor Protection Act is to protect depositors, etc. and maintain the stability of the financial system by efficiently operating the deposit insurance system in order to cope with situations in which a financial institution is unable to pay deposits, etc. for reasons such as bankruptcy. In light of the fact that the term “deposits, etc.” is set out in money raised by fraternitys, installments, deposits, and installment deposits based thereon, it is necessary to limit whether a bank constitutes “deposits, etc.” to cases corresponding to fraternitys, installments, deposits, and installment

② The essence of a consumption contract, the purpose of which is to deposit money from customers for a certain period of time and return money deposited by a financial institution, and such revenue activities can be conducted only by a financial institution authorized by the State. However, subordinated bonds can be issued by a general company, other than a financial institution. (ii) A subordinated bonds can be paid after full payment of principal and interest to senior creditors, such as deposit claims, in the event of the bankruptcy of a mutual savings bank, and (iii) a claim with a circulationability which is impossible in principle and transferable to a third party before maturity falls under a type of financial investment instrument, such as a change in market interest, if it is transferred to a third party before maturity. Accordingly, it cannot be deemed that the aforementioned subordinated bonds are in the nature corresponding to the foregoing installment savings, installment savings, deposit, and installment savings.

③ If the money raised by the instant subordinated bonds is deemed to be included in the scope of “deposits, etc.”, the Defendant is liable to pay insurance proceeds for all claims arising from financial transactions with a mutual savings bank, including the instant subordinated bonds. This cannot be deemed justifiable in light of the legislative intent and purpose of the Depositor Protection Act and the scope of the obligation to pay insurance proceeds to the insured financial institutions other than mutual savings banks.

④ In addition, Article 2 subparag. 2(e) of the former Depositor Protection Act (amended by Act No. 5492, Dec. 31, 1997) which is added to a mutual savings bank (former mutual savings bank) as an institution subject to deposit insurance provided that “deposits, etc. received by the mutual savings bank” are “deposits, installment savings, deposits, and installment savings received by the mutual savings bank,” and the above provision was revised to “money raised by the mutual savings bank through mutual savings and finance companies through mutual savings and finance deposits, etc.” The purpose of the amendment is to clarify the inclusion of a cover note issued by the mutual savings and finance company in the “deposits, etc.,” and there is no other legislative data suggesting that the mutual savings bank included the bonds issued by the mutual savings and finance company, such as subordinated bonds, etc. in the “deposits, etc.”.

⑤ Article 2 subparag. 4-2 of the former Mutual Savings Banks Act provides that “The term “deposits, etc.” means mutual savings deposits, installment savings, deposits, installment savings, and other obligations prescribed by Presidential Decree.” Article 3-2(1) of the former Enforcement Decree of the Mutual Savings Banks Act provides that “The term “any obligations prescribed by Presidential Decree” under Article 2 subparag. 4-2 of the Act refers to obligations owed by mutual savings banks following the issuance of bills, as provided in Article 11(1)9 of the Act.” As such, according to the former Mutual Savings Banks Act and the Enforcement Decree thereof, “deposits, etc.” means mutual savings banks, installment savings, and installment savings and obligations related to bills issued by mutual savings banks, and subordinate claims should not be included therein.

If a concept or term is provided for in different Acts, it shall be interpreted and operated uniformly as much as possible. The meaning of “deposits, etc.” under the Depositor Protection Act and the Mutual Savings Banks Act together is difficult to find a reasonable ground or necessity to be interpreted differently in light of the legislative intent and purpose, history of enactment and amendment, and the regulatory system. Therefore, it cannot be deemed that the term “deposits, etc.” under the former Depositor Protection Act, like the former Mutual Savings Banks Act, includes subordinated bonds.

(6) The current Mutual Savings Banks Act has the same expression as “repaid bonds (Article 14(1)),” and “repaid bonds, etc. (Article 18-5(1)).” Article 10-2(1) of the current Enforcement Decree of the Mutual Savings Banks Act provides that the subject of the duty to explain is different when recommending the conclusion of a contract by distinguishing deposits, subordinated bonds, etc. from subordinated bonds. As such, the current Mutual Savings Banks Act and its Enforcement Decree clearly stipulate that the scope of “deposits, etc.” does not include subordinated bonds.

7) Under the Mutual Savings Banks Act, the concept of “equity capital” and “deposits, etc.” are defined separately; when calculating the equity capital ratio of the Bank for International Settlements in a mutual savings bank, subordinated claims shall be calculated as equity capital, not liabilities. Furthermore, Article 2 subparag. 4 of the current Mutual Savings Banks Act provides that “equity capital” means the sum of core capital and supplementary capital pursuant to the standards set by the Bank for International Settlements, which shall be determined by the Financial Services Commission according to the standards prescribed by Presidential Decree; Article 3 subparag. 1 of the current Enforcement Decree of the Mutual Savings Banks Act provides that “basic capital shall be deemed to have permanent nature as real net assets of a mutual savings bank, such as capital and reserves; and Article 3 subparag. 2 of the current Enforcement Decree of the Mutual Savings Banks Act provides that “the complementary capital shall be the capital equivalent to the capital falling under subparagraph 1, such as subordinated bonds, which

8) The Financial Supervisory Service had a mutual savings bank set forth that subordinated bonds shall not be protected by the Depositor Protection Act at the time of issuance of subordinated bonds. Aside from whether the mutual savings bank of this case sufficiently explained the plaintiffs, it stated that subordinated bonds are not protected by the Depositor Protection Act in the subscription form for bonds used at the time of issuance of subordinated bonds or in the information on goods.

9. Article 30 (1) of the former Depositor Protection Act provides that "each insured financial institution shall pay to the Korea Deposit Insurance Corporation annual insurance premium an amount (one hundred thousand won where the amount is less than one hundred thousand won) calculated by multiplying the balance of deposits, etc. each year (the amount prescribed by Presidential Decree in consideration of liability reserves under Article 120 of the Insurance Business Act in cases of an insurance company) by the rate prescribed by Presidential Decree within the extent not exceeding 5/1,000." The mutual savings bank of this case has paid the insurance premium calculated on the basis of the balance of deposits, etc. pursuant to the above provision. However, the subordinated claim was not considered in calculating the

In conclusion, deeming that the funds raised with the instant subordinated bonds do not constitute “deposits, etc.” under Article 2 subparag. 2 of the former Depositor Protection Act is an interpretation consistent with the language and structure, legislative intent, and purpose of the Act. Therefore, the Plaintiffs’ assertion based on the premise that the funds raised with the instant subordinated bonds constitute “deposits, etc.” under Article 2 subparag. 2 of the former Depositor Protection Act is without merit.

5. Conclusion

Therefore, all of the plaintiffs' claims are dismissed as it is without merit, and it is so decided as per Disposition.

[Attachment 1] List of Plaintiffs: omitted

[Attachment 2] Claim List: omitted

[Attachment 3] Relevant Statutes: omitted

Judges Jeon Soo-Un (Presiding Judge)