Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Brokerages may lose money due to Indonesian tycoon
Brokerages on Yeouido, Seoul. / gettyimagesbank
By Kim Bo-eun
By Kim Bo-eun
Five local brokerages face a high risk of losing money in Indonesia as their combined credit exposure to an Indonesian tycoon ― over 60 billion won ($50.54 million) ― has been frozen.
According to data released by Rep. Ji Sang-wuk of the New Conservative Party, Tuesday, Hanson International Chairman Benny Tjokrosaputro owes the money to NH, Korea Investment & Securities, Shinhan, Mirae Asset Daewoo and Kiwoom Securities.
The magnate faces liquidity problems due to a suspension of trading in his business' shares and an accounts freeze by Indonesian financial authorities.
Forbes ranked Tjokrosaputro 43rd on the list of Indonesia's 50 richest people in 2018. His net worth was estimated at $670 million.
But last October, Indonesia's Financial Services Authority (OJK) ordered him to repay capital financed through “repo transactions.”
Repo, which stands for repurchase agreement, is a form of short-term borrowing under which the dealer sells underlying securities to investors and buys them back.
The chairman of one of Indonesia's largest residential property developers had purchased real estate by taking security-based loans from brokerages.
The OJK stated that according to regulations governing banks, real estate developers are banned from such transactions the business engaged in.
After the OJK's order was issued, the share price of businesses owned by Tjokrosaputro and his family plunged and trading was suspended.
Prosecutors also detained the chairman last month for questioning over his alleged involvement in financial irregularities at Indonesia's state-run insurer Jiwasraya.
This poses further uncertainties for the brokerages.
Among them, NH faces the greatest risk, as its funds account for 85 percent of the total amount ― 51 billion won.
The figure is 5.3 billion won for Korea Investment & Securities, 3.8 billion won for Shinhan, 250 million won for Mirae Asset Daewoo and 230 million won for Kiwoom.
An NH official said: “We will be able to sell shares of the Indonesian business we own when the suspension on trading is lifted, and we believe share prices may recover after the chairman is released and issues are sorted out."
But it remains unclear if and when this will become possible.
“We will have to wait, but we have stocks as collateral and believe we won't be subject to losses,” the official said.