The Korea Times

Its time to let go of Lone Star

By Kim Jae-won It’s now become a race against time. Come May 26, Hana Financial and Lone Star will be free from their deal on the Korea Exchange Bank (KEB). It is widely expected that financial regulators ― the Financial Service Commission (FSC) and its enforcement organization, the Financial Supervisory Service (FSS) ― will decide whether to okay Hana’s plan to purchase a controlling 51 percent stake in KEB from Lone Star during their scheduled meeting this month. At stake is the reputation of Korea Inc., which is already tarnished by its foot-dragging on the buyout fund’s exit plan. Financial experts say that Lone Star has little to lose, even if the deal falls through. It can get a fat dividend to cover the cost of buying KEB, while KEB will likely be blighted with little investment to go around for its future growth. Of course, the public would feel bitter about Lone Star getting away with a big payoff, if its deal with Hana is approved. The FSC and FSS are obviously worried about how that public wrath will affect them, which makes them keep delaying a final dec

May 6, 2011By Kang Seung-woo

Companies

Customers balk at social commerce

By Yoon Ja-young The social commerce market has marked explosive growth, with hundreds of companies competing in the sphere. To draw customer’s attention, they are spending billions of won in advertisements. Customers, however, complain that the money should be spent to improve services. The social commerce market opened up here a year ago, but it is expected to grow by over 10-fold this year from 50 billion won last year. According to a survey by the Seoul Business Agency, two out of three people here have used social commerce. Among them, 84 percent said they plan to use it again. Negative views on social commerce businesses continue here. Excessive advertisements by the firms are adding to concerns that there may be a bubble in the market. Ticket Monster, the biggest player in the industry, marked 20.6 billion won in sales in April. Coupang recorded 15.2 billion won, and WeMakePrice made 4.7 billion won. The top three account for over 80 percent of the market. As part of their aggressive marketing campaign, they are running advertisements on prime time TV. Ticket

May 6, 2011By Kang Seung-woo

Companies

SK Innovation emerges as cash cow

By Kang Seung-woo SK Group is expected to hail its new leading affiliate this year, as its oil-refining unit is on its way to becoming the most lucrative subsidiary of the nation’s third-largest conglomerate. According to the group, headed by Chairman Chey Tae-won, SK Innovation, Korea’s top oil refiner, is certainly likely to beat SK Telecom in operating profit in 2011. The nation’s leading mobile carrier has been the undisputed profit champion under SK’s wing for years. However, the two subsidiaries’ earnings for the first quarter of this year show that the pecking order is likely to change. Last week, SK Innovation announced that its earnings nearly tripled in the January-to-March period from a year ago on the strength of a rise in oil prices. Operating profit advanced nearly three-fold to 1.19 trillion won and net income came to 853.3 billion won ($794.4 million), compared with 303.6 billion won. Sales also rose 40 percent year-on-year to 17.08 trillion won in the cited period. On the other hand, SK Telecom said Wednesday that its operating profit increas

May 6, 2011By Kang Seung-woo

Companies

Win-win strategy for large and small firms

KITECH President showcases customer-oriented public enterprise By Kim Tae-gyu One of the latest “in vogue” phrases in Korea appears to be “shared growth between large-sized corporations and their smaller subcontractors” with President Lee Myung-bak stressing its significance. Under the initiative, the country’s major conglomerates competed earlier this year to announce ways to assist their partners, many of which are based around financial support. By contrast, Korea Institute of Industrial Technology (KITECH) President Na Kyoung-hoan claims that there is an alternative approach to chalk up shared growth through boosting the technological edge of small firms. ``Everything has multiple aspects and so should be shared growth. In our view, it is a crucial part of the concept to raise technical competitiveness of small- and medium-sized enterprises (SMEs),’’ Na said in a recent interview with The Korea Times. ``Under the mindset, we always think of how to contribute to them in terms of technology because we are the institute supposed to help SMEs improve their capabil

May 5, 2011By Kang Seung-woo

Companies

Korea offers $200 million to help Vietnam project

By Kim Tong-hyung HANOI ― Korea will offer $200 million in aid to Vietnam to help the country build a new bridge in the Mekong Delta region, the Export-Import Bank of Korea (Korea Eximbank) said Thursday. The Korean export credit agency is one of the financial backers of the $750 million project that also include the Asian Development Bank (ADB) and Australia’s AusAid. Eximbank said Korea’s economic development cooperation fund (EDCF) will be used to build a 3-kilometer cable-stayed bridge near the Vam Cong area of the Mekong River. AusAid will provide $130 million to build another bridge in the nearby Cao Lanh area, while ADB will inject $220 million to build a 15.7-kilometer highway connecting the two bridges. Korea’s spending of $200 million represents the largest assistance ever supported by the EDCF. The massive infrastructure project, dubbed as the Central Mekong Delta Region Connectivity Project, will allow Vietnam more stable transport of rice, its major export item, and jolt tourism and trade in the region, Korean government officials said. The Mekong Delta R

May 5, 2011By Kang Seung-woo

Companies

Bank federation chief blasts regulator

By Kim Tong-hyung HANOI ― Shin Dong-kyu, the chairman of the Korea Federation of Banks, blasted the Financial Supervisory Service (FSS) over its supposed ineptitude in monitoring risk-taking at the country’s secondary banks. Financial authorities have been forced to suspend the business operations of eight savings banks since early this year to prevent them from being toppled by their distressed real-estate assets. But critics question whether the FSS can be trusted to prevent the savings bank crisis from poisoning the financial system when a slew of corruption allegations suggest a murky relationship between regulators and the wayward lenders. Shin’s thorny comments came just hours after Korean President Lee Myung-bak made a rare visit to the FSS’ head office in Youido, Seoul, Wednesday, and pointed out that complacency has pushed the agency into the ``greatest crisis of its existence.’’ ``The FSS badly needs an internal reform. Their investigative authorities are soaked with power and it’s debatable whether they are doing their jobs properly when they fail to disp

May 5, 2011By Kang Seung-woo

Companies

Will Hyundai Motor shares price be corrected?

By Kim Da-ye Will shares of Hyundai Motor Group’s affiliates continue to ride high? Hyundai Motor stocks dropped 4.91 percent Tuesday while its sister company Kia Motors’ fell 5.71 percent and that of auto part maker Hyundai Mobis, 0.82 percent. Shares of Korea’s largest automakers shed a further 0.83 percent Wednesday. Though while Hyundai Mobis lost 1.1 percent, ia gained 1.23 percent. Analysts said that the downturn would only be temporary because investors want to realize profits from the current high prices. Investors will return soon because there still remains a lot of room for growth in share prices thanks to record earnings, weakened competitors and continuing launches of new models. Hyundai Motor shares have risen 189 percent from 134,500 won on May 3 a year ago to 254,500 won Monday while those of Kia Motors have nearly tripled from 27,800 won to 77,300 won. Hyundai Mobis’ stock has more than doubled from 181,000 to 366,000 won, and Hyundai Wia that produces auto parts and machine tools performed equally well, with its stock rising to 136,000 won

May 5, 2011By Kang Seung-woo

Companies

Savings banks owners to be vetted

By Kang Seung-woo The besieged financial watchdog will get tougher on major shareholders of savings banks to try and curb growing corruption scandals at the secondary banks. According to the Financial Supervisory Service (FSS) on Thursday, it plans to monitor 294 major shareholders and their family members from 67 savings banks, which have 300 billion won in assets and are subsidiaries of large savings banks, to see if they have violated any finance-related laws. The shareholders are those who have a more than a 10 percent stake in the selected 67 savings lenders. The FSS said that it will also carry out a stress test to see if they are fiscally sound. The FSS’ strict check-up is a pre-step of the regulator’s review of their eligibility as the largest shareholder, which is scheduled in July. The strict action came after the chief and other large shareholders and executives at the already-suspended Busan Savings Bank were found to have taken out billions of dollars in illegal loans from the institution and engaged in other irregularities involving a total of about

May 5, 2011By Kang Seung-woo

Companies

Another bank run at Jeil Savings Bank

By Kang Seung-woo Amid growing concerns over the shutdown of savings bank, account holders rushed to branches of Jeil Savings Bank, Wednesday, to withdraw their deposits. The secondary lender is being investigated by the Financial Supervisory Service (FSS) after its executives and employees were found to have given a 60 billion won illegal loan to a real estate developer. The bank’s branch located in central Seoul saw a long line of about 300 customers from the beginning of business hours with the number growing to approximately 3,000 at around 2 p.m. “Due to the business suspensions of savings banks, I am worried that Jeil Savings Bank may be ordered to halt its transactions. I am not sure if I will be able to withdraw my deposit of 50 million won today,” said one client. Another branch in Yeouido also saw more than 100 depositors, who wanted to withdraw their money, at 1 p.m. The bank run came after the Financial Services Commission (FSC), the decision-making arm of the FSS, suspended business operations at eight savings banks, including Busan Savings Bank, the la

May 4, 2011By Kang Seung-woo

Companies

Korea ranks 2nd in inflation among OECD nations

By Kang Seung-woo Consumer prices in Korea rose at the second-highest pace among major world economies for the third straight month in March, as soaring food prices ramped up overall inflationary pressure, an international economic organization said Wednesday. According to the data by the Organization for Economic Cooperation and Development (OECD), the nation’s consumer prices climbed 4.7 percent in March from a year earlier, the second-steepest gain among the 34 member countries surveyed. Korea has shown an uptick in the consumer price index, as it came in fourth in January and second in both February and March. Estonia, which perched at 5.7 percent in February, topped the list after remaining above 5 percent for the fifth straight month as its consumer prices increased 5.2 percent year-on-year and Greece, Hungary and New Zealand followed Korea with 4.5 percent gains. Poland and Israel sat at 4.4 percent and 4.3 percent respectively. Among the seven major advanced economies or G7, Britain posted the highest 4.0 percent year-on-year increase, while the United States,

May 4, 2011By Kang Seung-woo

Kang Seung-woo

Read more

Its time to let go of Lone Star

Customers balk at social commerce

SK Innovation emerges as cash cow

Win-win strategy for large and small firms

Korea offers $200 million to help Vietnam project

Bank federation chief blasts regulator

Will Hyundai Motor shares price be corrected?

Savings banks owners to be vetted

Another bank run at Jeil Savings Bank

Korea ranks 2nd in inflation among OECD nations

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