The Korea Times

KB reeling from Euh Yoon-dae risk

By Kim Jae-kyoung Staff reporter It is widely known that stock prices are the mirror of a CEO's leadership as the price reflect a company's fundamentals and directly relate to the CEO's long-term vision and strategy. The latest movement of KB Financial Group's shares suggests that the group is reeling from the so-called CEO risk as they have continued their downward spiral since Euh Yoon-dae was nominated as chairman on June 15. The selection was supposed to be good news for KB shares as Euh was expected to fill in the group's management vacuum since former CEO Hwang Young-key stepped down nine months ago. However, the stock price fell sharply and the union declared its opposition to the new head because of his plan to create a mega bank by taking over Woori Financial Group. Euh, a close aide to President Lee Myung-bak and the chairman of the Presidential Council on National Branding, has said that he would consider taking over Woori. His remarks re-ignited the heated debate over a mega bank in Korea, raising concerns that the government is trying to wield bureaucrat

Jun 28, 2010By Kim Jae-kyoung

Companies

BCG calls for prudence in exit plan timing

By Kim Jae-kyoung Staff reporter Economic policymakers should be extra careful in picking the right moment for implementing an exit strategy as any premature action could derail economic recovery, according to a global consulting company, Thursday. In its report titled "In the Eye of the Strom" based on a survey of 440 executives in seven developed countries, the Boston Consulting Group said that policymakers should focus on the long haul while ignoring short-term indicators. "The G-20 is urging members to develop credible strategies for reducing stimulus spending and allowing ultra-low interest rates to rise to more normal levels," the consulting firm said in the report. "These exit plans pose considerable risks to the nascent recovery. And sovereign debt crisis has taken the glass off some of the G-20's optimism," it added. According to the survey, 52 percent of the respondents forecast that the economic recovery will be L-shaped, while only 10 percent expect a V-shaped recovery. More than half of them expect corporate profitability to deteriorate down the road.

Jun 24, 2010By Kim Jae-kyoung

Companies

Countdown appears to be starting on exit plan

By Kim Jae-kyoung Staff reporter The government's latest economic forecast indicates that the Korean economy has recovered to its potential growth level and has entered a phase of sustainable economic recovery. In addition, the upbeat outlook suggests that Asia's fourth largest economy is taking one step closer to the full-fledged exit strategy, solidifying market belief that the central bank will raise interest rates in the coming months. Growing expectation over rate hikes was further buttressed by the central bank's measure Thursday to lower the ceiling on soft loans to small firms for the third quarter as part of efforts to normalize emergency steps. "Although there are risks of GDP growth slowing to a moderate pace in the second half, the latest economic outlook by the finance ministry shows that the economy has regained its growth potential," Samsung Economic Research Institute senior economist Kwon Soon-woo said. "Taking into consideration the upbeat outlook and the central bank's measures, it is moving toward rate hikes," he added. The Ministry of Strategy

Jun 24, 2010By Kim Jae-kyoung

Companies

Seoul to bar forex loans from domestic diversions

By Kim Jae-kyoung Staff reporter The Bank of Korea (BOK) said Wednesday that it will ban local financial firms from extending foreign currency loans for domestic investment in a bid to help ease volatility of capital flows and the currency market. But they will be permitted to provide such loans for smaller companies with difficulties in raising funds overseas. Those subject to the new rule are 55 local banks and financial firms, including foreign bank branches here. "We expect the new measures to help curb a sharp increase in external borrowing, reducing local firms' exposure to foreign exchange risks," BOK economist Lee Soon-ho said. The outstanding balance of foreign currency loans increased by $2.2 billion to $44.53 billion for the first four months of the year as foreign bank branches saw their foreign currency loans jump by $2.49 billion. Such loans declined by $8.2 billion in 2009 in the aftermath of the global financial turmoil. "Foreign currency loans for domestic investment has decreased since last year but there are growing expectations that such loans will

Jun 23, 2010By Kim Jae-kyoung

Companies

Woori Bank gets 3rd degree burns

By Kim Jae-kyoung Staff reporter Woori Bank has suffered losses of around 200 billion won stemming from irregular payment guarantees for project financing (PF), according to the Financial Supervisory Service (FSS) Tuesday. The financial watchdog said that the lender provided guarantees for PF worth 4.2 trillion won for six years from 2002 to 2008 without going through the proper procedure. As a result, the nation's second largest lender wrote off 194.7 billion won in losses associated with PF in June last year and set aside an additional 200 billion won in loan loss provisions. PF is a method of financing used to support the construction business and industrial projects based upon projected cash flows. It added that Woori's credit division signed an agreement to buy asset-backed commercial paper worth 4.2 trillion won issued by real estate developers without approval from the bank's credit screening committee. The agreement was the bank's promise to repay the amount, a de facto guarantee by the financial institution. "The bank had to hold an internal credit screenin

Jun 23, 2010By Kim Jae-kyoung

Companies

Will another private equity take over KEB?

Only a couple of bidders making serious pursuit of Korea’s 5th biggest bank By Kim Jae-kyoung Staff reporter Lone Star Funds Chairman John Grayken may feel uneasy about the latest development in the negotiations for the sale of Korea Exchange Bank (KEB) as it is unfolding in a way that he would prefer to avoid. Despite its efforts to attract many strategic investors both at home and abroad, only one private equity fund has submitted a letter of intent (LOI) to purchase a 51.02 percent controlling stake in the bank. Grayken is facing double dilemma. He has been pressed to step down due to the delay of the sale. He had persuaded investors to wait until the global financial market fully recovered to maximize returns. However, it doesn't seem like this scenario will happen, with few investors showing interest in KEB despite the relative recovery of the market. "Among three potential bidders ― MBK Partners, Standard Chartered (SC) and Australia and New Zealand Banking (ANZ) Group, only MBK submitted a LOI and became the sole bidder," a source close to the matter told The

Jun 23, 2010By Kim Jae-kyoung

Companies

Won soars after China signals yuan rise

By Kim Jae-kyoung Staff reporter The local currency rose sharply against the U.S. dollar Monday after China signaled an end to the yuan's two-year-old peg to the greenback Sunday, which many analysts believe will put upward pressure on the Korean won down the road. The won closed at 1,172 won to the dollar, up 30.6 won from the previous close, the highest in more than a month since it finished at 1,165.1 won on May 19. The local stock market also enjoyed a sharp rise, with the benchmark KOSPI jumping 27.73 points, or 1.62 percent, to end at 1,739.68. The tech-heavy Kosdaq market also rose by 3.13 points, or 0.63 percent, to finish at 498.36. Market analysts said that the appreciation was mainly due to the growing possibility of the yuan revaluation coupled with strong foreign buying on the equity market. "The won gained more ground on expectations that China will revalue its currency. I think that the won will continue strengthening against the dollar until China actually takes action," JP Morgan economist Lim Ji-won said. "The won-dollar exchange rate is expected

Jun 21, 2010By Kim Jae-kyoung

Companies

Handling KB union poses tough challenge

By Kim Jae-kyoung Staff reporter Euh Yoon-dae, the nominee for chairman of KB Financial Group, is facing a strong backlash from labor unions over the proposal to merge Kookmin Bank, the flagship of the group and the largest in Korea by assets, with Woori Bank, the nation's second largest lender. The unions of Kookmin and Woori joined forces Monday to oppose Euh's envisioned plan to create a so-called mega bank, which they believe is in line with Cheong Wa Dae's vision to enlarge the size of local banks. At the meeting, the two agreed to launch a joint taskforce to thwart Euh's bid to push for the merger. "A bank merger should be done in a way to maximize synergy. However, a merger between the two banks will have a negative effect both on the banks and the industry," said a senior union official at Kookmin, asking not to be named. "We believe that Euh, together with the government, is pushing ahead with the merger for the sake of Cheong Wa Dae's scheme," he added. Choi Chang-keun, the vice chief of Woori's union, said, "If Kookmin merges with Woori, it will dominate

Jun 21, 2010By Kim Jae-kyoung

Companies

Low rate, price rises emerging as toxic cocktail for inflation

By Kim Jae-kyoung Staff reporter The specter of inflation is steadily stalking South Korea, as pressure is building at a rapid pace due to a toxic cocktail of an increase in import prices and protracted low interest rate policies. Policymakers have joined forces to issue warnings against inflation, a move that is seen as an attempt to pave the way to unwind stimulus steps taken to minimize the economic downturn following the global financial crisis. Strategy and Finance Minister Yoon Jeung-hyun said Monday that the government will pursue balanced economic policies in the second half of this year. "We will manage economic policies in a way of keeping inflation in check while maintaining a pace of economic recovery," he said at a meeting with heads of economic think tanks. His remarks came after the Bank of Korea (BOK) reported Monday that the prices for imported goods jumped 2.7 percent in May month-on-month, the biggest monthly rise since they grew 5.1 percent in June 2009 and the fourth consecutive month of increases since February. Import prices soared 11.3 perce

Jun 14, 2010By Kim Jae-kyoung

Companies

Timing of exit strategies can vary

By Kim Jae-kyoung Staff reporter The nation's top central banker hinted Saturday that Korea will not rush to implement exit strategies in the same manner as other countries, saying that every economy is in a different situation. "Countries around the world are now seeking exit strategies for the unconventional policy tools that were mobilized in the course of getting through the financial crisis," Bank of Korea (BOK) Governor Kim Choong-soo said at an economic forum held in Seoul. "In view of the differences in the state of their economies, the timing and sequencing of exit strategies will vary from country to country," he added. "But it is vital to maintain a fundamental spirit of policy cooperation as exemplified by information sharing." His approach toward exit plans is based on his cautious analysis of the current local conditions. He believes that the future course of the Korean economy remains unclear due to lingering uncertainty both at home and abroad. "The future outlook is surrounded by no small degree of unpredictability with the opposing interplay of upsid

May 30, 2010By Kim Jae-kyoung

Kim Jae-kyoung

Read more

KB reeling from Euh Yoon-dae risk

BCG calls for prudence in exit plan timing

Countdown appears to be starting on exit plan

Seoul to bar forex loans from domestic diversions

Woori Bank gets 3rd degree burns

Will another private equity take over KEB?

Won soars after China signals yuan rise

Handling KB union poses tough challenge

Low rate, price rises emerging as toxic cocktail for inflation

Timing of exit strategies can vary

Top 5 stories