Concerns are intensifying in South Korea’s financial sector after a lawmaker called for a closer examination of Lotte Card’s financial dealings tied to struggling retailer Homeplus. Lee In-young, a senior member of the ruling Democratic Party of Korea, has urged authorities to investigate whether the credit card company absorbed substantial losses stemming from the retailer’s financial distress.
According to data disclosed by Lee’s office, Lotte Card has already categorized approximately $54 million in receivables linked to Homeplus as likely losses. The situation appears to be the result of a financing arrangement in which Lotte Card advanced payments to suppliers on behalf of Homeplus, expecting reimbursement at a later stage.
Transaction volumes between the two companies reportedly surged dramatically in recent years. Figures show that purchase card usage tied to Homeplus jumped more than tenfold, from around $51 million in 2022 to roughly $540 million in 2024, raising questions about risk management and exposure levels.
The issue escalated after Homeplus entered court-supervised restructuring earlier this year, leaving Lotte Card unable to recover a significant portion of the funds it had advanced. Lee criticized the structure of these transactions, arguing that the financial burden effectively shifted from the retailer to the card issuer.
He also took aim at MBK Partners, the private equity firm that controls both companies, suggesting that the arrangement could point to conflicts of interest. Lee called on financial regulators to investigate how such internal financing structures are managed within private equity portfolios and whether adequate safeguards are in place.
Meanwhile, scrutiny over Lotte Card has been compounded by a separate data security controversy. Regulators are currently reviewing penalties related to a major data breach that exposed sensitive information of nearly three million customers. Authorities are reportedly considering a temporary business suspension as part of disciplinary measures.
The broader situation highlights the growing pressures faced by companies under private equity ownership, particularly when affiliated firms engage in complex financial relationships. As Homeplus continues its search for a buyer amid ongoing rehabilitation proceedings, the outcome of these investigations could have lasting implications for both corporate governance and investor accountability in South Korea’s financial markets.