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Kang Seung-woo

Korea Times Business Reporter

Kang Seung-woo is the Business Desk editor at The Korea Times. Prior to this position, he covered politics, national affairs, finance and sports.

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Companies

Banks record a drop in BIS ratio

By Kang Seung-woo The Export-Import Bank of Korea (Eximbank), Korea Exchange Bank (KEB) and Kookmin Bank recorded the sharpest drops in their Bank for International Settlements (BIS) ratio in the second quarter. The Financial Supervisory Service (FSS) said Tuesday that Eximbank’s capital adequacy ratio dipped 1.04 percentage points, KEB lost 1.02 percentage points and Kookmin sank by 0.88 percentage points from three months earlier, while the average ratio of 18 lenders marked 14.29 percent as of the end of June, down 0.41 percentage points from May. The average fell from a record high of 14.7 percent in the preceding quarter, the sixth quarter that had seen the ratio go up. Several provincial banks ― Daegu, Busan, Jeju and Kyongnam banks ― along with the National Agricultural Cooperative Federation (Nonghyup) saw the ratio increase in the range of 0.01 percentage points to 0.47 percentage points. The BIS ratio measures the financial soundness of a bank by comparing its capital and risk-weighted assets. In the second quarter, the equity capital of banks dropped 0.9

Aug 31, 2010By Kang Seung-woo
Companies

Bad SME loans weighing down on banks

By Kang Seung-woo Korean banks are facing a bumpy road ahead in their move to fix their balance sheets already spoiled by massive defaults in project financing (PF), with a growing number of loans to small- and medium-sized enterprises (SMEs) becoming insolvent. What is of more concern is that banks will have to pile up more loss reserves for loans to SMEs as drastic restructuring slated for October will drive many debt-loaded firms into bankruptcy. The Financial Supervisory Service (FSS) reported Monday that the ratio of bad loans to the total extended to SMEs reached 3.04 percent at the end of the June, up 0.85 percentage points from three months ago. This was the highest since the FSS began compiling related data in September 2003. The bad loan ratio refers to the portion of loans overdue for more than three months. The watchdog said that the surge in bad loans was attributed to recent corporate debt restructuring programs led by local lenders. On June 25, creditor banks unveiled a list of 65 firms, including 16 builders, which were put under creditor-led restruc

Aug 30, 2010By Kang Seung-woo
Companies

Current account surplus hits 16-month high

By Kang Seung-woo Korea’s current account surplus hit a 16-month high in July, on the back of robust external shipments, the central bank said Friday. But it forecast the surplus to shrink in the coming months due to a slowdown in overseas demand. The Bank of Korea (BOK) said the current account recorded a surplus of $5.88 billion (7.02 trillion won) last month _ up from $5.1 billion in June _ thanks to the strong exports of ships and other key products. The figure was the biggest surplus since March 2009, when it logged $6.64 billion. In addition, it has remained in the black for six months in a row. The current account is the broadest measure of trade that reflects the movement in goods and services. The July surplus has brought the figure for the first seven months of the year to $17.55 billion. The BOK’s set its yearly prediction at $21 billion. “The surplus for August is expected to considerably narrow from July on retreats in overseas shipments and a rise in overseas royalty payments,” Lee Young-bog, head of the BOK’s balance of payments statistics team, said

Aug 27, 2010By Kang Seung-woo
Companies

Overseas card spending reaches 2-year high

By Kang Seung-woo The central bank said Friday that the economic recovery has pushed overseas credit card spending by Koreans to a near two-year high in the second quarter. According to the Bank of Korea (BOK), overseas credit card bills reached $1.74 billion (2 trillion won) from April to June, up 3.7 percent and 36 percent higher compared to the last quarter and last year, respectively. The figures were the highest expenditure outside Korea since the third quarter of 2008, when the outlay with plastic cards amounted to $1.85 billion. “The escalating numbers of overseas trips on the back of the economic rebound has promoted spending abroad,” an official of the BOK said. Impressive exports and increasing domestic demand empowered the nation’s economy to rise 7.6 percent in the first half from a year earlier, the fastest expansion in 10 years. Quarterly overseas spending descended to $1.1 billion in the first quarter of 2009, but it returned to $1.49 billion in the third quarter of the year and eventually to $1.68 billion in the first quarter of this year. Despite

Aug 27, 2010By Kang Seung-woo
Companies

Borrowers burdened by excessive interest rates

By Kang Seung-woo Over four in 10 people who borrow from private money lenders pay interest of more than 40 percent. The interest rate for loans cannot exceed 44 percent according to a law enacted in July in order to help the increasing number of those credit-starved, cash-strapped people. The Korea Asset Management Corp. (KAMCO) recently conducted a survey of 600 people aged between 20 and 59, who had taken out more than 1 million won in loans within the past year. The survey showed 44.5 percent of those who relied on nonbank private loan providers paid interest charges at 10 percent or above. Interestingly, those who were most credit-crunched were better aware of their credit ratings than the average. About 64.5 percent of those who took private loans knew about their credit-worthiness. The overall average is 53.2 percent. A possible explanation for this is that they have been desperate enough to find anybody who will lend them money after their requests for loans from banks and other reputable sources were rejected and in the process have come to be aware of

Aug 27, 2010By Kang Seung-woo
Companies

Gov’t will support exporters to Iran

By Kang Seung-woo The government has come up with a financial rescue plan to help small- and medium-sized exporters that may be adversely affected by the deterioration of relations with Iran, if Korea joins the U.S.-led international sanctions against the Middle Eastern state. The Financial Services Commission (FSC) Wednesday announced that the government will support them with debt rollover programs and low-interest loans. The United States has been pushing Iran to give up its nuclear program, which the latter continues to resist. Earlier this month the Obama administration has also pressured Korea to impose independent sanctions on Iran, but Seoul is waiting to gauge how strongly the U.S. will go after the Middle East nation that is also major Korean trading partner. Tehran has also repeatedly warned of the consequences, saying that the negative action could severely damage the lucrative trade relations between the two countries. Their trade volume has been soaring. Under the plan, the government will provide small and medium enterprises with 18-month rollovers o

Aug 25, 2010By Kang Seung-woo
Companies

Korea posts BOP surplus for 6th quarter in a row

By Kang Seung-woo Korea has posted a surplus in the balance of payments (BOP) for the sixth quarter in a row since the fourth quarter of 2008, after the global financial crisis erupted in the previous quarter, the government said Wednesday. The Ministry of Strategy and Finance said the nation has kept the BOP in the black since it reported a deficit of $7.5 billion in the third quarter of 2008, citing a report by the Organization for Economic Cooperation and Development (OECD). A total of 10 countries including Korea achieved the BOP surplus during the one-and-half-year period. The BOP is composed of the current account and capital account, meaning all of a country’s economic transactions with the rest of the world over a certain time period, typically a calendar quarter or year. A surplus is interpreted as a sign of economic health. Exports-oriented Korea was hit hard by the financial turmoil, logging the negative $7.5 billion mark, but it bounced back in the fourth quarter of 2008, with $6 billion in surplus, boosted by export gains. Since then, Asia’s fourth-larg

Aug 25, 2010By Kang Seung-woo
Companies

KoreaToday Hyundai Group shrugs off debt concerns

Stage set for the conglomerate to take over Hyundai Engineering & Construction By Kang Seung-woo Hyundai Group, led by Hyun Jung-eun, the widow of Chung Mong-hun, one of the founder’s sons, is just about ready to acquire Hyundai Engineering and Construction (HEC). Korea’s leading construction firm, which was the starting point of the business empire before a three-way split, has been under creditors’ control. To Hyundai Group, which is now composed of Hyundai Merchant Marine, Hyundai Securities, Hyundai Asan, acquiring the construction firm is both a sentimental issue as well as a pivotal business move. By reclaiming it, Hyun will be able to do what her late husband couldn’t ― set the stage for a new business model for the conglomerate that is in dire need of one. In August 2001, Hyundai Group was split into three ― Hyundai Motor, Hyundai Heavy Industries and one which retained the name, Hyundai Group ― while the remaining businesses were taken over by creditors. Since then, Hyundai Group has kept an eye on the firm. Officials of the group say that, under its

Aug 25, 2010By Kang Seung-woo
Companies

Banks face tighter checks on internal control system

By Kang Seung-woo Local banks and financial services companies are expected to undergo much tighter checks on their internal control system, as the nation’s top regulating agency has decided to beef up on-site inspection in the wake of frequent financial incidents. The Financial Supervisory Service (FSS) said Sunday that it has come up with 10 plans to prevent financial problems in a preemptive manner, which will soon be in place. The FSS said that it will form a check list of financial incidents by type and inspect financial firms ― banks including savings banks, insurers and securities companies ― by October. The financial watchdog ordered the companies to report back if they are prepared for their shortcomings after self-inspections. For firms, where financial problems often happen or a large-scaled one occurs, the FSS will sign a memorandum of understanding (MOU) to keep them in check. Frequent financial troubles have the FSS, headed by governor Kim Jong-chang, on his toes. Earlier this month, a former branch manager of Korea Exchange Bank (KEB), identified by

Aug 22, 2010By Kang Seung-woo
Companies

KB to overhaul compensation scheme

By Kang Seung-woo Since his debut as the financial group’s head last month, Euh Yoon-dae, chairman of KB Financial Group, has stressed organizational reform at the firm, in order to fix its balance sheets and improve productivity. For the last decade, KB had kept the top spot in the local financial market in terms of profitability, but lost out to rivals Woori Financial Group and Shinhan Financial Group last year, hit hard by the global financial crisis. In a bid to reclaim its former glory, Euh has spearheaded the group’s reform drive to reduce costs and increase profits, and it is on full display now, with a 90-man taskforce, set up late last month, in operation. The latest move was to overhaul the group’s compensation system. To that end, it plans to fix its key performance indicator (KPI) as KB, the largest financial group by assets, has recently ordered its subsidiaries to come up with reform measures. KPI is a quantifiable measurement that reflects the critical success factors of an organization. The move came after Euh recently noted that despite the recent poor

Aug 22, 2010By Kang Seung-woo
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