Korea Deposit Insurance Corp., South Korea’s state-run deposit insurer, is pushing to float up to 14 trillion won ($12 billion) worth of unsecured bonds in a bid to brace for an overhaul of savings banks, financial sources said Monday.

KDIC plans to issue 300 billion won worth of unsecured bonds every week starting next month in a bid to prepare funds totaling 14 trillion won, according to the sources.

The move is expected to help government efforts to salvage the fragile sector.

In March, a special fund was installed at KDIC as part of efforts to restructure the savings bank industry. The fund, which draws money from insurance commissions from savings banks and other financial institutions, was initially set to run until 2026 to help finance deposits and insufficient capital by raising around 1 trillion won annually.

South Korea has suspended 16 savings banks this year, citing their inadequate asset health and capital bases. 

(Yonhap News)