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Kakao Bank's capital increase plan hits snag

By Kim Bo-eunKakao Chairman Kim Beom-suIt has become uncertain whether Kakao will be able to become the majority shareholder of Kakao Bank, through an injection of capital to enable the bank to grow. This is because last month the prosecution appealed against a lower court ruling acquitting Kakao Chairman Kim Beom-su of violating the Fair Trade Act.Kim was on trial for failing to submit reports on Kakao's five affiliates, despite the company qualifying as a conglomerate. The lower court acquitted the Kakao chief, noting that this did not appear to be intentional as the documents were submitted shortly after the company was notified about the omission.Kakao requested the financial authorities to review its eligibility as the majority shareholder of Kakao Bank, but will have to wait until the top court's ruling is made.The firm, which currently owns 10 percent of Kakao Bank's shares, is seeking to increase its stake to 34 percent, the maximum non-finance companies are allowed to own after related regulations were revised and went into effect this year.Under current regulations, entitie

Jun 9, 2019By Kim Bo-eun
Kakao Bank's capital increase plan hits snag

Securities firms face punishment for lax overseas trading management

By Lee Kyung-min NH Investment & Securities Jeong Young-chaeThe Financial Supervisory Service (FSS) will reprimand Samsung, Mirae Asset, NH and seven other securities companies for their inadequate management to prevent possible human-induced trading errors, financial industry officials Friday.The Korea Securities Depository (KSD) will also be subject to the punishment, they said.Subject to possible disciplinary measures are major investment banks (IB) including Korea Investment & Securities, Mirae Asset Daewoo, NH Investment & Securities and Samsung Securities. KB Securities, whose IB license was approved recently by the Securities and Futures Commission (SFC) under the Financial Services Commission (FSC), will manage to avoid punishment. Brokerages are expected to be fined, while at least a verbal warning is in store for the KSD. KSD CEO Lee Byung-rhaeThis follows a May 30 deliberation from a disciplinary commission under the FSS.The degree and extent of final disciplinary action will be determined following a review of both the SFC and FSC as early as later this month.

Jun 7, 2019By Lee Kyung-min
Securities firms face punishment for lax overseas trading management

Kyobo Life chief pressed by financial investors over put option

Kyobo Life Insurance Chairman and CEO Shin Chang-jaeBy Jhoo Dong-chanKyobo Life Insurance Chairman and CEO Shin Chang-jae is facing mounting pressures from investors seeking to exercise a put option to withdraw their investments from the life insurer.A put option is a stock market device that gives the owner the right to sell an asset at a specified price by a predetermined date to a given party. Of the insurer's investors, a consortium led by Hong Kong-based Affinity Equity Partners (AEP) submitted an application for arbitration against Shin with the International Chamber of Commerce (ICC) last year to exercise the put option, since the insurer has yet to go public after years of delay.Following AEP's lead, another investor Standard Chartered Private Equity (SC PE) has also requested ICC arbitration recently to recover damages from the delay in the insurer going public.Tension between Shin and Kyobo's investors intensified since the insurer decided not to submit its application for an initial public offering (IPO) last year because of the nation's sluggish stock market.In 2012, the

Jun 7, 2019By Jhoo Dong-chan
Kyobo Life chief pressed by financial investors over put option

Dovish Fed stance ties BOK's hands

Bank of Korea Governor Lee Ju-yeolBy Lee Kyung-min The Bank of Korea (BOK) is coming under growing pressure to lower its key interest rate, following the unexpected dovish stance from the U.S. Federal Reserve, according to financial market analysts Thursday.On Tuesday (local time), Federal Reserve Chairman Jerome Powell said the U.S. central bank was “prepared to act” to help the country's 10-year economic expansion if President Trump's ongoing trade war continues with China, Mexico and other nations. “We do not know how or when these issues will be resolved,” Powell said. “We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 percent objective.”His dovish remarks have cornered the BOK, with Korean financial market watchers increasingly expecting the central bank's rate-setting monetary policy board will lower the rate to 1.5 percent from 1.75 percent in the third quarter. The as

Jun 6, 2019By Lee Kyung-min
Dovish Fed stance ties BOK's hands

KEB Hana teams up with Ant Financial for digitalization

KEB Hana Bank CEO Ji Sung-kyooBy Lee Kyung-min KEB Hana Bank's Chinese corporate entity has introduced a mobile platform for loan services in China as part of its continued efforts for digitization, the bank said Thursday. The development follows a joint project between KEB Hana and Ant Financial, a fintech affiliate of Alibaba, China's e-commerce giant. The new platform will enable KEB Hana to offer financial services to 1 billion users of Alipay, Alibaba's payment platform, including taking out small, short-term loans. The bank plans to use consumption pattern analysis data of Alipay users in assessing credit risks and develop more financial products that best meet customers' needs. This will help the two entities establish a stable source of profit. Up to 300,000 yuan (51 million won) will be transferred to a loan seeker's account upon approval from the credit review department. A loan request can be submitted via mobile app, after clicking a few buttons and entering the amount and maturity date of the loan. The minimum borrowing rate is set at 5.48 percent, although differin

Jun 6, 2019By Lee Kyung-min
KEB Hana teams up with Ant Financial for digitalization

Strategic partnership

Shinhan Card Multi Finance division head Ahn Joong-sun, left, Incheon Airport Operation Service (IAOS) head Jeong Tae-chul, center, and Shinhan Bank Executive Vice President Kim Sung-woo hold copies of a signed memorandum of understanding at the IAOS, May 30. Under the agreement, Shinhan Financial Group's two subsidiaries will secure IAOS workers as customers in exchange for bonus reward points that can be used at shopping malls and gas stations. Courtesy of Shinhan Card

Jun 6, 2019By Lee Kyung-min

Investors moving to fix SM Entertainment's 'murky corporate governance'

SM Entertainment founder Lee Soo-manBy Jhoo Dong-chanKB Asset Management sent an open letter to SM Entertainment demanding better corporate governance and dividend payouts, the company said Thursday.Owning a 7.59 percent stake, KB Financial Group's asset management unit is the third-largest shareholder of the nation's largest entertainment agency.“SM Entertainment is paying Like Agency about 46 percent worth of the agency's entire operating profit every year,” KB Asset Management said in the letter.“Like Agency is another entertainment agency owned entirely by SM Entertainment founder Lee Soo-man. Such a practice clashes with the interests of SM Entertainment's shareholders. This could develop into a social issue, or a legal battle with shareholders in the worst case.”The asset management firm also demanded an immediate merger between SM Entertainment and Like Agency while paying a 30 percent dividend payout ratio.According to SM's business report, Like Agency has provided a producing and consulting service for SM Entertainment performers over the past 10 year

Jun 6, 2019By Jhoo Dong-chan
Investors moving to fix SM Entertainment's 'murky corporate governance'

Korean banks seek cash cow in Cambodia

By Jhoo Dong-chanKorea's commercial banks are expanding their presence in Cambodia by providing differentiated financial services for customers, bank officials said Thursday.In line with the Moon Jae-in administration's New Southern Policy, banks have done their utmost in developing new growth engines in Southeast Asian countries to overcome the saturated domestic market. And Cambodia is becoming their El Dorado, reflecting its rapid economic growth.According to financial circles, Shinhan and KB Kookmin Bank have entered the Cambodian market by establishing corporate bodies, while Woori acquired a local savings bank and a microfinance firm there.“Banks require a joint guarantee when a debtor loans money here since Cambodia hasn't fully developed a credit rating system yet,” Shinhan Bank Cambodia head Lee Tae-kyung said.“Like Cambodia, a friend or family member often stood as a joint surety for a loan in Korea about 30 years ago. We have been there. Korean banks could be an ideal partner as we have had a similar experience.” Shinhan Bank entered the Cambodian m

Jun 6, 2019By Jhoo Dong-chan
Korean banks seek cash cow in Cambodia

Triple whammy weighs on local insurers

By Jhoo Dong-chanThe nation's insurers have been locked in a low-growth trap as triple challenges are weighing on their businesses.Domestic insurers gained about a 201 trillion won ($1.69 billion) premium income to make Korea the world's seventh-largest country in terms of insurance market size last year. Of the nation's entire households, 98.4 percent have more than one insurance policy as of December.Despite its seemingly solid market size, domestic insurers are entering crisis mode due to a decline in earnings, demographic changes and a new set of accounting standards.According to the Financial Supervisory Service (FSS), the nation's non-life insurers suffered a 17.8 percent year-on-year decline in earnings in 2018. Last year's downtrend continued in the first quarter of the year since their net profit dipped 18.4 percent in the period compared to a year ago.Disappointing earnings are cornering domestic life insurers as well. Their initial premium income totaled 10.9 trillion won last year, down 40.5 percent from three years ago.“We don't have many options,” said a dom

Jun 6, 2019By Jhoo Dong-chan
Triple whammy weighs on local insurers

Banks fix eyes on baby boomers

By Jhoo Dong-chanCommercial banks are engaging in a cutthroat competition to attract the nation's 7 million baby boomers as their retirements start in earnest next year. These baby boomers are the post-Korean War generation born between 1955 and 1963.Lenders are not only assigning taskforces to accommodate these customers but are also expanding inter-subsidiary cooperation under their financial groups.KEB Hana Bank said Tuesday it has formed a 15-man taskforce exclusively assigned to the bank's premium pension products. They will offer a one-on-one consulting service for baby boomer customers.The bank is also reviewing a plan to double the taskforce's size by the end of the year while strengthening its non-face-to-face services to attract more customers.“It will cost billions of won to introduce the entire system, but KEB Hana Bank has decided to invest money in the sector to secure the market beforehand,” said a KEB Hana Bank official.Shinhan and KB Financial Group are also enhancing their inter-subsidiary cooperation to strengthen their pension management capacity.&ldqu

Jun 6, 2019By Jhoo Dong-chan
Banks fix eyes on baby boomers
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