The Korea Times

Woori plans to compensate investors

Bank moves to legal action against Citigroup, BoA, Merill Lynch, Royal Bank of Scotland By Kang Seung-woo Woori Bank has decided to accept a high court ruling that holds it responsible for losses incurred by a fund invested in derivatives products and ordered to pay fund holders 70 percent of their investment losses from its Woori Power Income Fund, citing an improper sale. The Woori decision is being followed by a move to take a legal action against Citigroup, Bank of America (BoA)-Merrill Lynch and Royal Bank of Scotland (RBS) with a U.S. court to hold them responsible for losses in derivatives investments of as much as $300 million. Eighty-seven investors of Woori Power Income Fund initially filed a damage suit of 2.9 billion won, but the compensation was settled at 2.03 billion won by the high court. The 70 percent is the highest compensation ruled by a court on fund sellers or asset management firms. The previously highest compensation was 40 percent. The fund was launched by Woori Credit Suisse Asset Management in 2005 and Woori Bank and other fund agencies s

Nov 28, 2011By Kang Seung-woo

Companies

POSCO’s outside directors join donation campaign

By Kang Seung-woo POSCO’s outside directors have joined the company’s donation campaign, the steelmaker said Sunday. According to the world’s third-largest steel producer, all seven of the company’s non-executive directors, headed by Yoo Jang-hee, a professor Emeritus of Ewha Women’s University, have decided to donate 1 percent of their monthly salaries, starting from this month. The donations come as the firm’s executives and high ranking employees and its affiliates began the sharing movement last month and they are expected to reach 870 million won (about $759,510) per year. Since the firm’s board of directors also decided to donate the same amount of money on a matching scheme, the donations are estimated to annually total over 1.1 billion won. “The outside directors decided to join the charity activity after the board of directors reached an agreement to make a donation,” said a POSCO official. The donations will be sent to the Community Chest of Korea for social welfare activities at the end of each month to support children from multicultural families and to con

Nov 27, 2011By Kang Seung-woo

Companies

Blizzard of bad data

Officials warn markets of more external blows By Kang Seung-woo Economic indicators point to recurring instability in the Korean financial market. The cost of insuring Korea’s sovereign debt against a default rose once more, while the benchmark index tumbled below the 1,800 mark last week and the currency exchange rate went up by more than 70 won. Rubbing salt in the wound, a mass exodus of European capital, accounting for about 50 percent of the nation’s foreign exchange borrowing, is straining the market. Amid such uncertainties, the financial watchdog plans to have local financial institutions brace for any possible turmoil. According to the Korea Center for International Finance (KCIF) on Sunday, the nation’s credit default swaps (CDS) premium on its five-year foreign currency bonds, which reflects the cost of hedging credit risks on sovereign debt, closed at 177 basis points Friday, up from the 127 recorded on Oct. 28. The credit default swaps are derivatives contracts traded on the over-the-counter market that work as insurance to protect lenders against loan

Nov 27, 2011By Kang Seung-woo

Economy

Reforming structure of home loans

FSS chief vows to ensure soft landing for debt-ridden households By Kang Seung-woo Korea’s financial sector is confronting several near-term risks ― deterioration in loan quality due to rapid credit expansion, a downturn in real estate prices, and lingering woes abroad such as the fiscal crisis in Europe. Among them, mounting household debt may be the biggest headache for policymakers and regulators as they are closely interrelated to all aspects of business and thus have a far reaching impact if they spin out of control. While household income is falling amid rising inflation, consumer debt has continued on an upward spiral despite the government’s efforts to keep them in check. What is of more concern is that the debt is growing faster than assets. As part of efforts to address the fundamental problem associated with household debt, the head of the nation’s financial watchdog is adopting a two-pronged approach. In the short-term, it is focusing on managing the quality of the debt by ensuring a soft landing for financially-troubled households. In the long-term, it

Nov 27, 2011By Kang Seung-woo

Companies

Brokerages expand overseas investment

By Kang Seung-woo Korean securities companies’ investments overseas increased in the first half, compared to a year ago, as they make efforts to diversify their profit sources, the financial watchdog said Thursday. And emerging Asian countries that are competing heavily to draw investment are becoming the destination. According to the latest figures from the Financial Supervisory Service (FSS), a total of 28 local brokerages’ overseas investments reached 2.47 trillion won ($2.16 billion) in the January-to-June period of 2011, up 25.7 percent from 1.97 trillion won a year earlier. The overseas investment is comprised of 1.43 trillion won from purchasing foreign assets including equities and bonds and 1.04 trillion won investments in overseas-based subsidiaries. Since June last year, investments in local subsidiaries have been hovering around 1 trillion won, while foreign asset purchases have increased from 963.2 billion won. Previously, local players’ asset purchases were mainly limited to equities, but recent their portfolios are verifying, with money being pumped

Nov 18, 2011By Kang Seung-woo

Companies

Beleaguered Korea Inc. begins to shave payroll

Korean Air to cut 100 jobs, Hana Bank, SC First opt for early retirement schemes By Kang Seung-woo The global economic gloom is pushing Korean companies to massively cut their workforce. Some have already started laying off their employees, while others are on the verge of enforcing early retirement programs to slash costs and streamline their business portfolio. Industries such as aviation, construction and finance have given the pink slip to a portion of their employees. Despite the economic slump, however, steel, shipbuilding and distribution are some safe havens removed from the job cutting. Korean Air, the nation’s largest air carrier, has cut around 100 jobs via a voluntary retirement program aimed at increasing its efficiency. In the third quarter of this year, Korean Air recorded a net loss of 524.3 billion won ($461.9 million) due to soaring fuel costs, weakening local currency and a Japanese earthquake in March. The voluntary retirement scheme, the first such action in five years, affected high-paid, mid-level officials who have worked for 15 years

Nov 18, 2011By Kang Seung-woo

Companies

’Eastern Germany emerging as business destination’

By Kang Seung-woo More than 100 Korean companies have advanced into Germany, but most of them are located in Western Germany. As part of balancing regional development, the German government is stepping up efforts to lure more Korean investment into Eastern Germany, a high-ranking government official said Friday. “Korean companies have entered many sectors such as automobiles, machinery, semiconductors, information and communications, software, chemicals and plastics, but their interest concentrates on Western Germany,” Christoph Bergner, a secretary of state in the Federal Ministry of the Interior, said in an interview with The Korea Times in Seoul. According to the German, who turns 63 next week, there are currently 125 Korean companies operating in the eurozone’s largest economy and they are heavily placed in the west including Hessen, Bayern and Baden-Wurttemberg. “Despite the current high density in Western Germany, I hope the Korean economy will have an interest in Eastern Germany because there will be more opportunities for Korean companies to take advantage of,

Nov 18, 2011By Kang Seung-woo

Companies

Woori, KDB post high bad-loan ratio

By Kang Seung-woo State-run lenders Korea Development Bank (KDB) and Woori Bank, and Suhyup Bank reported the highest bad-loan ratios among major lenders in the third quarter, which were well above the average of 18 domestic banks, the financial watchdog said Wednesday. According to the latest figures from the Financial Supervisory Service (FSS), Suhyup, or the National Federation of Fisheries Cooperatives, posted a non-performing loan (NPL) ratio of 2.41 percent in the July-to-September period, followed by KDB and Woori, which registered 2.36 percent and 2.25 percent. The bad-loan ratio refers to the portion of loans overdue for more than three months. The average NPL ratio for Korean banks came to 1.66 percent as of the end of September, down 0.07 percentage points from the previous quarter. Among seven commercial banks, Kookmin came in second at 1.88 percent behind Woori and Korea Exchange Bank (KEB) sat at 1.29 percent; while Shinhan and Hana logged 1.24 percent and 1.15 percent, respectively. Among six regional banks, Jeju Bank, an affiliate of Shinhan Financial,

Nov 16, 2011By Kang Seung-woo

Companies

Banks’ FX deposits soar amid turmoil

By Kang Seung-woo Korean banks’ foreign exchange deposits steeply increased last month in response to growing concerns over currency volatility in global financial markets and solid exports, data showed Tuesday. The foreign exchange rate was on the down side last month, but ongoing European sovereign debt problems in Greece and Italy can still wreak havoc on the global financial markets, which led companies to buy dollars and save them in their accounts. According to the bank industries, foreign currency deposits at the nation’s five major commercial banks — Kookmin, Shinhan, and Woori Bank, Hana banks and Industrial Bank of Korea (IBK) — recorded $17.09 billion as of the end of October, up $2.4 billion or 16.6 percent from the previous month. The October reading was the largest monthly growth since 2009, when data collection began. The sharp increase came mainly because companies bought dollars last month and put them into foreign exchange deposits in anticipation of a possible rebound of foreign exchange rates amid the global financial turmoil. Curre

Nov 15, 2011By Kang Seung-woo

Companies

Korea’s total financial debt 2.6 times GDP

By Kang Seung-woo Korea’s total debt — at state and private levels — has reached 2.6 times its gross domestic product (GDP) as of the end of June 2011, data showed Monday. Especially, household debt is growing very fast to pose a big threat to the overall health of the economy. Total debt includes that of the government as well as public firms, private companies and households. According to think tanks and brokerages, the total debt reached 3,283 trillion won ($2.93 trillion) as of June 30, up 5.7 percent up from 3,106 trillion won a year ago. The debt-to-GDP ratio is based on an estimate that Asia’s fourth-largest economy will expand 8 percent year-on-year to reach 1,267 trillion won by the end of the year. The government debt, which refers to the liabilities of the central and provincial governments, stood at 419 trillion won, up 5.9 percent from 396 trillion won a year earlier, while debts of households and non-profit organizations grew 9.4 percent to 1,050 trillion won, the data noted. Private companies owed 1,461 trillion won, while state-run

Nov 14, 2011By Kang Seung-woo

Kang Seung-woo

Read more

Woori plans to compensate investors

POSCO’s outside directors join donation campaign

Blizzard of bad data

Reforming structure of home loans

Brokerages expand overseas investment

Beleaguered Korea Inc. begins to shave payroll

’Eastern Germany emerging as business destination’

Woori, KDB post high bad-loan ratio

Banks’ FX deposits soar amid turmoil

Korea’s total financial debt 2.6 times GDP

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