Financial reform and risk management

This is the ninth in a monthly series contributed by executive members of the Financial Supervisory Service to address key ongoing financial issues. ― Ed.In 2015, financial reforms and risk management emerged as a major issue in Korea’s financial industry.Most said that Korea’s real economic sector has significantly expanded, but the financial sector does not have the corresponding scale and capacity. And it has been pointed out that competitiveness of the financial sector should improve for sus

March 28, 2016

KEPCO, AmorePacific shoot up in market cap ranking

Korea’s state-run utility firm Korea Electric Power Corp. and top cosmetics-maker AmorePacific saw their rankings of market capitalization shoot up among listed companies on the KOSPI this year, on the back of lowered costs on cheap oil and the global popularity of “K-Beauty” products, industry data showed Monday.According to data by the Korea Exchange, KEPCO’s market cap gained 17.8 percent on-year to 37.81 trillion won ($32.27 billion) as of March 23, rising to No. 2 in the KOSPI ranking from

March 28, 2016

KKR chosen as preferred bidder for Kim’s Club

E-Land Group has chosen U.S. private equity giant KKR as the preferred bidder for Kim’s Club, a 37-branch hypermarket franchise with annual revenue of around 1 trillion won ($860 million), it said Monday. “KKR was most willing to invest in Kim’s Club,” the Korean retail group said. The two sides aim to sign a final contract in early May, the group said. KKR, one of the world’s biggest buyout funds, is to commence due diligence on Kim’s Club.The deal, if sealed, would mark the second major takeov

March 28, 2016

Won-dollar exchange rate takes roller-coaster ride

The won-dollar exchange rate has taken a roller-coaster ride this year, with uncertainty high over its future course. This increasing volatility -- which reflects a complex set of external and internal conditions affecting the country’s economy -- makes it tougher for policymakers to mobilize means to boost growth and for companies to draw up business plans.The rate rose to 1,238.8 won per dollar on Feb. 25, up 66.3 won from where it was at the start of the year, marking the highest level in fiv

March 28, 2016

Regulator extends advisory on youth loans as unemployment chips into age group

The financial regulator on Monday extended the advisory period on loans by youths for another year as high-running unemployment in the age group exacerbates their debt loads from non-banking institutions that charge heavier interest rates.The Financial Supervisory Service (FSS) in February last year had reined in on savings banks that provide loans to college students and other youths by requiring the lenders to inform the borrowers of alternatives from state-run institutions and to set the cred

March 28, 2016

Carlyle among suitors for KDB Capital

U.S. private-equity giant Carlyle is among the three suitors for KDB Capital, an equipment leasing and venture capital firm 99.9 percent owned by the state-run Korea Development Bank, local reports said Monday. Also in the running are a local private equity fund set up by Seoul-based SK Securities and a nonfinancial company based in Korea.  Korea Development Bank headquarters in Seoul (Yonhap)The bank is selling its entire stake in KDB Capital whose book value is around 600 billion won ($514 mil

March 28, 2016

[Photo News] Coffee shop in a bank

COFFEE SHOP IN A BANK -- Woori Bank CEO Lee Kwang-goo (sixth from left) poses with Suk Jae-won (seventh from left), CEO of M’s Seed, the Korean operator of Australian premium coffee chain Paul Bassett, at their first collaborative shop-in-shop branch in southern Seoul on Monday. Customers can have gourmet coffee while visiting the bank, or carry out related activities in the cafe. (Woori Bank)

March 28, 2016

Insurers most profitable among Korean financials in 2015

Insurance companies raked in the most profits in the financial sector last year, largely boosted by investment-related earnings and non-operating profits, industry data showed Sunday.The combined net incomes of Korean insurers stood at 6.3 trillion won in 2015, followed by 3.5 trillion won for banks and 3.2 trillion won for securities firms, according to preliminary earnings reported to the Financial Services Commission and regulatory filings with the Financial Supervisory Service.Banks suffered

March 27, 2016

NPS' dissenting votes up in 2015: data

South Korea's state-run pension fund actively exercised its voting rights last year with its number of dissenting votes edging up, data showed Saturday.Data from the National Pension Service (NPS), the operator of the fund, showed it voted against 10 percent of 2,836 resolutions last year at shareholders meetings of the companies it invested in, a 1.1 percentage point rise from a year earlier.The fund had been casting more opposing votes in the past few years, the no votes accounting for 6.6 per

March 26, 2016

Korean shares edge down on U.S. woes

Korean stocks closed lower Friday as poorer-than-anticipated economic data from the United States and a possible U.S. rate hike down the road continued to weigh on local investors. The local currency lost ground against the U.S. dollar for a third consecutive session.The benchmark Korea Composite Stock Price Index (KOSPI) retreated 2.16 points, or 0.11 percent, to close at 1,983.81. Trade volume was moderate at 457.3 million shares, with losers beating winners 425 to 370.Local shares opened a ta

March 25, 2016

[Market Now] Hanwha, LIG, private equities in takeover race for Doosan DST

Hanwha Techwin and LIG Nex1, two of Korea’s leading weapons manufacturers, will be racing to bid for Doosan Group’s armored vehicle manufacturer Doosan DST. Doosan DST's armored vehicle (Doosan DST)Doosan Group opened bids for DST on Friday, with analysts forecasting that Hanwha could be the “last bidder standing,” given that Hanwha has secured sufficient cash following its recent block sale of its 4 percent stake in Korea Aerospace Industries. Private equity funds such as MBK Partners and IBK P

March 25, 2016

Korea Investment CEO to serve 9th term

Korea Investment & Securities said Thursday that president Ryu Sang-ho will serve his ninth term, becoming the longest-serving CEO in the nation’s securities industry where the average CEO tenure is about three years.The reappointment was agreed upon in a shareholders meeting earlier in the day. Ryu, 56, has led the nation’s fifth-largest brokerage firm by equity capital over the past eight years since he took office as the industry’s youngest CEO in 2007. Under his leadership, the company has b

March 25, 2016

[Market Now] KB, Korea Investment in takeover battle over Hyundai Securities

The race to take over Hyundai Securities will come down to two Korean financial holdings giants – KB Financial Group and Korea Investment Holdings – bidding for cash-strapped Hyundai Group’s brokerage.(Yonhap)After their shareholders meeting on Friday, chief executives of KB Financial and Korea Investment expressed their determined intent to acquire Hyundai Securities’ 22 percent stake owned by Hyundai Merchant Marine.“We have submited an appropriate bidding price for the brokerage,” Yoon Jong-k

March 25, 2016

Elliott drops suit against Samsung C&T

A U.S. hedge fund dropped a suit filed against Samsung C&T to end their months-long dispute over the merger between two Samsung units.  Elliott Associates dropped the case on Wednesday after reaching an agreement with Samsung C&T, according to a news report. A recent probe into Elliott on suspicions of a breach of local disclosure rules regarding its previous acquisition of Samsung C&T shares seems to have pushed the hedge fund into making the latest decision, industry sources said.As a stakehol

March 25, 2016

[Market Now] STX Engine considers selling communication business

STX Engine, a listed diesel engine manufacturer, said in its regulatory filing that it is considering selling its communication equipment business as part of its debt restructuring.“The company has been in talks with its creditors (led by state-run Korea Development Bank) regarding the possible sale of the communication equipment unit as part of its self-rehabilitation plan,” STX Engine said in a disclosure filing.STX Engine has been in a creditor-led debt workout since September 2013 following

March 25, 2016

Seoul shares open higher on Wall Street gains

South Korean share prices opened in the positive following overnight gains in the U.S. markets. The benchmark Korea Composite Stock Price Index added 0.68 point, or 0.03 percent, to 1,986.65 in the first 15 minutes of trading. As of 10:05 a.m., the index was trading flat at 1985.92. Traders monitor Seoul share prices at a local bank. (Yonhap)Overnight, the Dow Jones industrial average inched up 0.08 percent to close at 17,515.73, while the tech-heavy Nasdaq rose 0.1 percent to 4,773.51.Large mar

March 25, 2016

[Market Now] Lotte Chilsung seeks acquisition of Pepsi bottler in Pakistan

Lotte Chilsung Beverage, a listed subsidiary of Lotte Group, said in its disclosure statement that it is currently negotiating a deal to take over a PepsiCo bottler in Pakistan.It added that the company would further disclose details when the deal progresses in three months.This comes as the Korea Exchange sought clarifications from the soft drink maker to verify reports that it is seeking an acquisition of Lahore PepsiCo in Pakistan last month.Lotte Chilsung, whose majority shareholder is Lotte

March 25, 2016

Three bid for KDB Capital

Three groups have submitted preliminary bids for KDB Capital, an equipment leasing and venture capital firm 99.9 percent owned by Korea Development Bank, the state-run bank said Thursday.“The bidders will commence preliminary due diligence,” the Seoul-based bank said, declining to give names of the suitors, citing confidentiality clause.  Korea Development Bank headquarters in Seoul (Yonhap)This is the second time that KDB has tried to sell its stake whose book value is 600 billion won ($514 mil

March 24, 2016

Korean shares down 0.46% on oil prices, possible U.S. rate hike

Korean shares closed lower Thursday as a drop in global oil prices and fears of a possible U.S. rate hike down the road spooked investors. The local currency further lost ground against the U.S. dollar.The benchmark Korea Composite Stock Price Index (KOSPI) lost 9.15 points, or 0.46 percent, to 1,985.97. Trading volume was slim at 336.2 million shares, with losers greatly outnumbering winners 510 to 289.The index opened lower following overnight losses on Wall Street, which was prompted by repor

March 24, 2016

Korea to open doors to ‘robo advisers’

Korea will cut red tape related to “robo advisers,” allowing intelligent machines to advise retail investors where to put their money from later this year, the nation’s top financial regulator said Thursday. In addition, a new class of human advisors who work independently for clients and do not represent any bank, securities or insurance firm, will be allowed to debut, the Financial Services Commission said. Financial Services Commission chairman Yim Jong-yong (Yonhap)“The plans are intended at

March 24, 2016