Kang Seung-woo

N. Korea runs risk of economic crisis again

By Kang Seung-woo Staff reporter The North Korean economy is forecast to contract this year due largely to South Korea's decision to suspend inter-Korean trade in retaliation for the North's surprise attack on a navy vessel, a state-run research organization said on Tuesday. The Korea Development Institute (KDI) said that North Korea's economy would continue to plummet in 2010, following a 0.9 percent contraction in 2009, but it did not disclose a specific estimate for this year. However, the think tank predicted the possible repetition of the level seen in the 1990s, if this downward trend continues. "The North is very likely to see its economy shrink this year," the KDI said. "Our outlook is based on a forecast that its external trade will likely suffer a setback." The contraction has chiefly caused by the escalating tension on the Korean Peninsula. In May, the South announced that it would stop most trade with the North after claiming a North Korean torpedo attack sank its Navy frigate the Cheonan on March 26, killing 46 sailors. The KDI said the ban would cost

N. Korea runs risk of economic crisis again

By Kang Seung-woo Staff reporter The North Korean economy is forecast to contract this year due largely to South Korea's decision to suspend inter-Korean trade in countermeasures for its surprise attack on a navy vessel, a state-run research organization said on Tuesday. The Korea Development Institute (KDI) said that North Korea's economy would continue to plummet in 2010, following a 0.9 percent contraction in 2009, but it did not disclose a specific estimate for this year. However, the think tank predicted the possible repetition of the level of crisis seen in the 1990s, if this downward trend continues. "The North is very likely to see its economy shrink this year," the KDI said. "Our outlook is based on a forecast that its external trade will likely suffer a setback." The contraction is chiefly caused by the escalating tension on the Korean Peninsula. In May, the South announced that it would stop most trade with the North after claiming a North Korean torpedo sank its Navy frigate the Cheonan on March 26, killing 46 sailors. The KDI said the ban would cost

Korea Post, KDB entering card business

Consumers may benefit from lower fees By Kang Seung-woo Staff reporter The Korea Development Bank (KDB) and Korea Post are bracing for a fierce battle after announcing that they are both launching credit-card businesses. However, despite a diversity of predictions on their future performances in the new industry, market analysts say that consumers are expected to benefit from a more crowded field of credit card companies. "The arrival of new players in the industry means more choices and more opportunities for consumers," Daewoo Securities senior analyst Ku Yong-uk said. "They will be more open to enjoy a variety of services from the card issuers. Consumers have nothing to lose." Samsung Economic Research Institute (SERI) banking analyst Kim Jae-woo was in line with Ku in terms of growing benefits for consumers. "A battle between credit-card firms will lead to an intensifying price competition," he said. "If the competition gets fiercer firms are expected to bring down credit-card fees for affiliates and private users will be able to savor more options." L

KB Bank CEO Kang Chung-won, fourth from left, cuts the ..

KB Bank CEO to quit before tenure is up

By Kang Seung-woo Staff reporter Kookmin Bank CEO Kang Chung-won said Tuesday he plans to resign on July 13, when the bank's shareholders meet and is expected to confirm Euh Yoon-dae as chairman of KB Financial, the bank's holding firm. According to KB Bank officials, Kang told the bank's executives in a meeting that he would serve as CEO until the date for the shareholders' meeting. Kang's tenure is to expire in October. They said that Kang already conveyed to Euh and KB Finance's board of directors his intention to step down in mid-June after Euh was nominated. "I want you to do your best to develop and stabilize the bank," Kang was quoted as telling the executives. "The bank needs to focus on fiscal soundness." Kang's expression to quit appears aimed at allowing Euh to reorganize KB without a hitch. The 59-year-old, who also served as vice chairman at KB Financial, was nominated for the top job at KB Financial in December 2009 but decided to drop his bid before being confirmed at a shareholders' meeting. Kang was also under investigation twice with the o

Korea shrugs off snubs on index entry

Impact on foreign investments expected to be limited By Kang Seung-woo Staff reporter Despite South Korea's disappointment in failing to join leading indexes, market analysts believe that this will have a limited impact on the local financial markets as it is unlikely to hamper foreign investment. Asia's fourth-largest economy missed the cut into Citigroup's World Government Bond Index (WGBI), the finance ministry said Monday. The local stock market, however, shrugged off the news, with the benchmark KOSPI rising 0.21 percent, or 3.55 points, to close at 1,675.37 Monday. Korea was also excluded from the league of developed markets in Morgan Stanley Capital International (MSCI)'s equity indices last month. The Citi index is a market capitalization weighted bond index comprised of the government bond markets of developed countries, while the MSCI index is one of the major stock market indices in the world. "Since 2007, foreign investment in the local bond market has been steady, but it is not due to the expectation of Korea making it into the WGBI," Peter Jong-y

Uncertainty pushes up time deposits

By Kang Seung-woo Staff reporter Amid a roller-coaster ride in the stock markets and a deflated asset bubble, the banking industry is seeing a high rise in time deposits which offer the safety of banks with a relatively high interest rate. Also factoring in the picture is the active pursuit of deposits by banks, being under the pressure of regulators. The banking industry said Sunday that the total amount of time deposits in the six local lenders reached 356.65 trillion won ($290.31 billion) as of the end of last month, up 59.71 trillion won, or 20.1 percent, from the end of 2009. The six banks are Kookmin, Shinhan, Woori, Hana, Industry Bank of Korea (IBK) and Korea Exchange Bank (KEB). The average interest rate for one-year maturity time deposits is set at 3.77 percent. In contrast, funds linked with stocks suffered a 716.5 billion won decrease in the January-to-June span. According to the Korea Financial Investment Association (KOFIA), equity funds lost 10.43 trillion won in subscriptions in the first half of the year. "Uncertainty has been growing. As a res

Nation’s economy grows robust 7.2% in First half

By Kang Seung-woo Staff reporter The Korean economy is estimated to have grown 7.2 percent year-on-year in the first half of 2010, riding on brisk exports and recovering domestic demand. The robust growth is expected to fuel expectations for the start of an exit plan with a key rate increase in August, if not this month. "Following an 8.1 percent growth in the first quarter of the year, the local economy is predicted to gain 6.3 percent in the second quarter, making it 7.2 percent for the first six months," an official of the Ministry of Strategy and Finance said. The official also attributed the high growth to the fact that the economy tanked in the corresponding period of last year. Asia's fourth-largest economy was hit hard by the global financial crisis a year ago but has been on a fast recovery track since. Korea posted a record trade surplus of $7.47 billion (9.17 trillion won) in June for the fifth straight month. The current account surplus also hit a six-month high of $3.83 billion in May, remaining in the black for four months in a row. Consume

Woori Aviva, LIG under fire for misleading clients

By Kang Seung-woo Staff reporter Woori Aviva Life Insurance and LIG Insurance had an unusually high ratio of contracts nullified due to misleading or misinforming clients last year, the firms' public disclosure showed. A comparison of local insurance firms' "misleading sales" between April 2009 and March 2010 also revealed that insurance products offered over the telephone, internet websites and TV shopping channels are often more deceptive than ones sold face-to-face by agents. Misleading sales refer to contracts canceled by the clients' request on an insurer's failure to give enough information, or the absence of a written agreement or signature. Insurance firms have to report the ratio of their misleading sales against total sales in their annual report. Woori Aviva had the highest rate by agent, logging 4.22 percent, which is three times higher than the average of the life insurance sector (1.31 percent). It was also the worst in telemarketing with a ratio of 16.85 percent, which is twice as high as the 8.08-percent average of the industry. Woori Aviva is jointl

Doosan signs $4 bil. deal with UAE

Doosan Heavy Industries and Construction announced Thursday that it has signed a 4.7 trillion won ($4 billion) deal with the Korea Electric Power Corporation (KEPCO) to provide a nuclear reactor to the United Arab Emirates (UAE). A Korean consortium, led by the KEPCO, won the deal worth $20 billion last December, and the nation's No. 1 power equipment maker will design, build and operate four 1,400-megawatt reactors by 2020 in the UAE. "We will contribute to the export of more Korean-built reactors after completing the first global project in cooperation with KEPCO," said Park Gee-won, the president and CEO of the company.