The Korea Times

Prospects dim for fraud-ridden P2P lenders

gettyimagesbankBy Lee Kyung-minSkepticism is growing against peer-to-peer (P2P) lending, a method of debt financing via online platform, Tuesday, amid a slew of fraud allegations that the new financial service providers exploited the lack of reliable appraisal data needed for ensuring transparent and accountable transactions.A lack of accountability of creators and promoters of the new lending will lead to immense investor losses, tainting the once-touted “innovative” method of borrowing between individuals and companies on a digital platform bypassing traditional intermediary banks.Many investors are expected to incur losses misled by the much-hyped “near-term, high-yield” investment that promised up to 15 percent in annual returns with less than 2 percent delinquency ratio, given the principal and interest paid on initial investment of previous investors were pulled from a group of new investors.Three key officials at Pop Funding, a P2P lender whose collateral was stockpiles of goods to be sold on TV shopping channels, were indicted with physical detention f

Jul 21, 2020By Lee Kyung-min

Prospects dim for fraud-ridden P2P lenders

Banking & Finance

'Commercial banks willfully neglect consumers' right to cheaper financing'

A man walks past a sign that promotes Kakao Bank in Seoul. Korea Times fileBy Lee Kyung-min Commercial banks faced criticism Monday for allegedly not actively informing customers when they can seek a borrowing rate cut, in what many borrowers consider an underhanded move seeking greater interest income.Borrowers are allowed to ask lenders for a reduced rate if their credit improves following an increase in income or asset value or a reduction in debt. Lenders must respond no later than 10 days after receiving a request with the specifics on why the request was granted or denied. The measure aimed at defending the best interests of consumers has been effective since June 2019.Those who took out credit-based loans from the country's top commercial banks ― KB Kookmin, Shinhan, Woori, Hana and Nonghyup ― do not receive any regular notification about changes in their credit status, a basis for seeking a lower borrowing rate.“We do not necessarily send texts or emails to customers that saw changes in credit,” an official from one commercial lender said. “We let them know

Jul 20, 2020By Lee Kyung-min

'Commercial banks willfully neglect consumers' right to cheaper financing'

Economy

Salaried workers upset over tax increases

GettyimagesbankBy Lee Kyung-minThe tax on salaried workers' earned income has grown at nearly twice the rate of their income rise, enraging workers, data showed Monday.Data from National Tax Service showed the agency collected 41.9 trillion won ($34.8 billion) in earned income tax in 2019, up 7.5 percent, or 2.9 trillion won from a year earlier.This shows a much faster rise than their income that jumped only 4.1 percent in 2019 from a year earlier. Also contrasting sharply with the 7.5 percent year-on-year tax increase on earned income is the tax revenue total which jumped to 303.4 trillion won in 2019, up 3 percent from a year earlier.Tax on salaried workers is still increasing much faster than corporate tax that reported a 1.7 percent year-on-year increase of 72 trillion won in 2019 and value-added tax that recorded a 1.2 percent year-on-year increase of 71 trillion won in the same period.Tax revenue collected from salaried workers more than doubled in the past decade, whereas their average income rose a meager 4 percent year-on-year in the same period.The tax burden shouldered by

Jul 20, 2020By Lee Kyung-min

Salaried workers upset over tax increases

Economy

'W6 tril. put into hedge funds at risk'

Two lawmakers of the main opposition United Future Party listen to victims of the scandal-ridden Optimus Asset Management at the hedge fund's headquarters in Seoul, July 15. Korea Times fileBy Lee Kyung-min About 5.8 trillion won ($4.8 billion) in funds put into a fifth of asset management firms appears to be shaky, fueling concerns that the recent slew of fiascos involving mismanaged hedge funds will repeat in the coming months, data showed Friday.Calls for greater accountability of the creators and sellers of the intricately designed financial products are likely to spread across the financial sector, given almost all leading banks, brokerages and asset management firms profited at the expense of consumers.Also escalating is a conflict between two financial authorities ― the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) ― whose lack of coordination in the respective functions of policymaking and supervision have caused market confusion, leading to an overall lax oversight. Data submitted to the National Policy Committee under the National Assembly

Jul 17, 2020By Lee Kyung-min

Economy

Leveraged trading hits record high

Rapid loss feared upon margin call By Lee Kyung-min Stock investors leveraged more than 13 trillion won ($10.7 billion) in July, a record-high figure that has doubled in only about three months, data showed Friday.The strong equity market sentiment is driven chiefly by bio- and pharmaceutical-oriented shares of new coronavirus test kit makers as well as researchers and developers of treatments and vaccines amid the COVID-19 pandemic. Yet investor caution is required because as much as gains may more than double in a bullish market, losses will be just as rapid in a bearish one because repeated failures to meet margin calls will lead to liquidation, wiping out the total investment in as little as a couple of trading days.Brokerages make margin calls on investors to demand more funds or securities to the “margin account” whose balance has fallen below a certain level following losses. Repeated calls gone unmet will lead to liquidation whereby brokerages will sell shares in the account at the lowest possible price at the opening of the following trading day. Korea

Jul 17, 2020By Lee Kyung-min

Economy

Reporter's notebook What is your identity? A question to FTC chief Joh Sung-wook

Joh Sung-wook / Korea Times fileInnovation initiative will be marred by questionable decision By Lee Kyung-min Innovation is a major policy drive of the Moon Jae-in administration.The country’s 18 ministries as well as many other government agencies have made great efforts to come up with policies that fit the grand initiative, a collective agenda seeking sustainable, future-oriented growth, with the need all the more pronounced amid the economic crisis brought on by the COVID-19 pandemic.Innovation is needed because the idea of something new can prompt people to reflect on the past and the present, leading to creative thinking for progress and improvement in the future.It is therefore understandable for most ministries with the primary function of policy making to encourage new ways of thinking that could foster technological development.But that is not the case with the Fair Trade Commission (FTC) whose first and foremost role as an antitrust agency is to crack down on unfair business practices.FTC Chairwoman Joh Sung-wook came under heavy criticism in May for not filing a cr

Jul 16, 2020By Lee Kyung-min

[Reporter's notebook] What is your identity? A question to FTC chief Joh Sung-wook

Banking & Finance

Lenders to tighten rules against default risks

People seeking to take out loans sit in front of tellers at a bank in Seoul, in this file photo. Korea Times fileBy Lee Kyung-minCommercial banks are rushing to impose stricter lending rules following a spike in credit-backed borrowing from individuals and low-income businesses run by the self-employed, in a precautionary measure to rein in default risks triggered by the economic crisis amid the spread of the COVID-19 pandemic.The collective move is explained by a drop in delinquency rates in June from a month earlier, a statistical illusion created due to a spike in loans taken out from stock investors and mortgage seekers amid the record-low borrowing rate.Experts say the rapidly rising debt not backed by strong economic recovery in sight will be a “ticking time bomb” that will hit the fiscal soundness of lenders whose financials will tank once repeated delinquency rates develop into full-fledged defaults.The country's top five banks ― KB Kookmin, Shinhan, Hana, Woori and NongHyup ― have initiated strengthened measures to monitor and manage high-risk borrowers and at-ri

Jul 13, 2020By Lee Kyung-min

Lenders to tighten rules against default risks

Banking & Finance

E-workshop for latter half

KB Financial Group Chairman Yoon Jong-kyoo, head of the table, presides over a meeting attended by over 200 key group officials to discuss business strategies for the latter half of 2020 at the head office of KB Kookmin Bank on Yeouido, Seoul, July 10. At the teleconference gathering, officials shared ideas for effective corporate management following drastically changed business conditions due to the COVID-19 pandemic. During a following speech, Yoon called for a back-to-basics growth strategy bolstered by robust sales and financing, keys to corporate survival amid a shifting paradigm. Courtesy of KB Financial Group

Jul 12, 2020By Lee Kyung-min

Economy

Calls grow for NH Investment to redeem Optimus investors

A man walks past the entrance of the head office of Optimus Asset Management in Seoul. Korea Times fileBy Lee Kyung-min Attention is growing over whether some 800 people who put money into the scandal-ridden Optimus Asset Management will have up to 50 percent of their initial investment returned, pending a board meeting of NH Investment & Securities this week.The investment subsidiary of NH Financial Group was the top seller of financial products through which Optimus attracted over 500 billion ($416 million) from investors. It brought in 452.8 billion won, accounting for nearly 90 percent of the total, followed by Korea Investment and Securities with 28.7 billion won.The NH board is expected to deliberate on how much of the initial investment the securities subsidiary should return to those whose request for redemptions on a combined 440 billion won investment have yet to be processed.Pressuring a prompt return is Korea Investment and Securities' plan to return to investors 20.1 billion, accounting for 70 percent of the 28.7 billion won it sold. The amount, however, will be give

Jul 12, 2020By Lee Kyung-min

Calls grow for NH Investment to redeem Optimus investors

Economy

Reporter's notebook 'Actions speak louder than words'

Kim Hyun-jun / Korea Times fileWhy NTS chief's anti-property speculation drive sounds relevant By Lee Kyung-min One of the main policy drives of National Tax Service (NTS) Commissioner Kim Hyun-jun has been identifying attempted tax evasion concerning gains derived from property trading, in line with the Moon Jae-in administration's key initiative to stem real estate speculation.A year after he took office on June 28, 2019, the drive under his leadership seems still relevant, mostly because he avoided being “too hypocritical,” unlike many senior Cheong Wa Dae officials still refusing to sell their additional “homes,” except one, despite the President's repeated recommendation.Before Kim was named NTS commissioner, he had two homes ― one in Apgujeong, southern Seoul, and the other in Seongnam, Gyeonggi Province.But he sold the apartment in Gyeonggi Province at a loss of nearly 300 million won ($250,000) shortly before his confirmation hearing held June 26.Factoring into the hurried decision was the need to gain a competitive edge against his then-major competi

Jul 10, 2020By Lee Kyung-min

Lee Kyung-min

Read more

Prospects dim for fraud-ridden P2P lenders

'Commercial banks willfully neglect consumers' right to cheaper financing'

Salaried workers upset over tax increases

'W6 tril. put into hedge funds at risk'

Leveraged trading hits record high

Reporter's notebook What is your identity? A question to FTC chief Joh Sung-wook

Lenders to tighten rules against default risks

E-workshop for latter half

Calls grow for NH Investment to redeem Optimus investors

Reporter's notebook 'Actions speak louder than words'

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