President Lee Myung-bak Saturday urged the government to brace for unexpected impacts from the U.S. financial crisis and take precautionary measures to protect small firms from external risks.
"Financial situations at home and abroad are stabilizing, but we should be prepared to deal with contingency situations in a swift and active way as they can have negative impacts on the real economy," Yonhap News quoted Lee as saying. President Lee made the remarks during a breakfast meeting of economic aides and ministers at the presidential office of Cheong Wa Dae.
Lee called on financial authorities to pay keen attention to small firms that are more vulnerable to external financial turmoil.
"Large companies may manage their capital flows, but for small and mid-size firms, temporary cash flow problems can drive them into bankruptcy," he was quoted as saying. "To prevent this, financial authorities and agencies need to check regularly the circumstances at each company and be prepared with thorough measures."
With regard to the cancelled purchase of Korea Exchange Bank by HSBC Holdings, Lee said, "In some way, the government lost an opportunity as it failed to make a swift decision."
The British banking giant Thursday announced that it terminated the deal with U.S. equity firm Lone Star Funds to buy a 51.02 percent stake in KEB, citing falling asset values amid global financial market turmoil.
Last September, U.K.-based HSBC agreed to buy South Korea's No. 5 lender from Lone Star for $6.3 billion, but the deal remained deadlocked as the financial watchdog withheld its approval, citing legal disputes over Lone Star's 2003 purchase of KEB. Before HSBC dropped the deal, the Korean watchdog had changed its position and said it would approve the purchase at an appropriate time.
The announcement was a major blow to Lone Star. Two major Korean banks _ Kookmin Bank and Hana Bank _ are currently looking into the KEB takeover.
Lee also called on his Grand National Party to extend support for the passage of deregulation bills pending in the assembly, such as a revision bill aimed at easing bank ownership rules for conglomerates and other non-financial firms.