By Kim Jae-won
Staff Reporter
Korea is facing an influx of major Japanese 'loan sharks,' which target vulnerable people and demand excessively high interest rates.
A couple of leading Japanese money lenders with more than 10 trillion won in total assets are preparing to make forays into the local market, while some already operating here are seeking to increase their presence.
The move came as the Japanese private money-lending market has been increasingly unprofitable after the Japanese government decided to cap the interest rate for private lenders at 20 percent from June 2010, compared with the previous 29 percent. This is well below Korea’s 49 percent.
In early November, Metro Asia Capital had its name enrolled at the Financial Supervisory Services as a non-bank private money lender. TWJ, American subsidiary of Takefuji, has a 39.1 percent stake in the company. Takefuji is Japan’s fourth-largest loan company, which has 12.5 trillion won in total assets.
The company is interested in a big savings bank, which has know-how of micro credit loans. “Takefuji will be in charge of the consumer finance division of Metro Asia Capital,” an official of the FSS said.
Promise and Acom, Japan’s number one and two loan companies, are also considering making inroads into the local market.
“The two companies have already researched the Korean market a few times. They want to advance into Korea as a merging savings banks,” a source in the industry said.
Japanese private moneylenders made their debut here in 1998, and now about 30 companies are doing business here.
Among them, Rush and Cash, and Sanwa Money are the most prosperous as both companies have 45 percent of the total market.
Rush and Cash, founded by a Korean-Japanese, is the top company in the industry, boasting more than 1 trillion won in total assets followed by Sanwa Money, which has 800 billion won.
“The size of Japanese loan sharks are bigger than Korea’s counterparts. If more Japanese players come to the nation, chances are that they will dominate the domestic market in the foreseeable future,” a source of the business said.
Local private money lenders are concerned about the Japanese moneylenders’ movements.
“Domestic players are less competitive than Japanese loan sharks in terms of capital power and interest rates. We are under pressure about that,” an official of Leadcorp, a leading domestic moneylender, said.
A loan shark is a person or body that offers loans at usury rates to individuals, often backed by blackmail or threats of violence.