Korea is expected to launch a task force team consisting of officials from finance and regulatory agencies to exchange opinions and discuss ways to increase the capital base of state-run policy banks for massive restructuring of cash-strapped shipping and shipbuilding companies.This comes as the Financial Services Commission, the financial regulatory policymaking body, unveiled its initial plan to launch creditor-led debt restructuring last week, citing the need to increase capital buffers of th

May 1, 2016

The U.S. inclusion of Korea in the foreign exchange monitor list will not affect Seoul’s monetary policy, Korean economic policymakers said Sunday. “As Korea avoided the manipulator designation, there won’t be any significant changes in the foreign exchange polices,” Finance Minister Yoo Il-ho was quoted as saying. Finance Minister Yoo Il-ho (Yonhap)“Although Korea is included on the monitoring list, this always happens with the U.S. department. There will be no changes (in the country’s policie

May 1, 2016

South Korea’s Finance Minister Yoo Il-ho has called for rapid and aggressive restructuring of companies under heavy debts to ensure that this does not negatively affect the capital market and household consumption.In an economic-related ministerial meeting on Thursday, the finance minister also urged other officials to draw up countermeasures and support mechanisms against the expected massive layoffs from companies that are about to go through creditor-led debt reduction. He urged agencies to i

April 28, 2016

State-owned Korea Development Bank was founded in 1954 with a specific goal and role -- to back the government’s industrial policies by providing necessary capital to help companies innovate, grow and most importantly, create jobs.But 62 years later, with a plethora of companies failing to meet their debt obligations and facing inevitable restructuring through asset sales and job cuts, the policy bank has now turned into a “fireman” who will have to put out the fire caused by corporate mismanage

April 27, 2016

A slew of companies ranging from shipping, shipbuilding to petrochemicals and steel -- once Korea’s growth engines -- exposed to financial risks stemming from downturns and bad debts are about to face rigorous restructuring spearheaded by the top financial regulator.The Financial Services Commission said Tuesday that it will carry out the so-called “three-track” system of corporate restructuring. Under the scheme, the regulator in collaboration with other state agencies and creditor banks will i

April 26, 2016

Korea’s state-run policy banks have been questioned on whether they can withstand potential debt fallout from companies facing marginal or weak profitability, with lenders’ capital buffering capability falling on increased loans to financially instable conglomerates.A report by the Korea Development Institute showed that the country’s two main policy lenders – Korea Development Bank and the Korea Export-Import Bank – extended loans worth 82 trillion won ($70 billion) two years ago, up from 34 tr

April 25, 2016

A number of securities companies have increased their expectations for KT&G following the earnings surprise by the KOSPI-listed tobacco-maker in the first quarter.Eugene Investment & Securities said the company is expected to continue its momentum in the second half of this year, increasing its share price target from 130,000 won ($113) to 150,000 won. It recommended buy.Samsung Securities also increased the target valuation to 145,000 won a share from 135,000 won as its first quarter operating

April 25, 2016

Korea’s corporate bond issues fell more than 40 percent to 1.6 trillion won ($1.4 billion) last month due to worsening corporate sentiment, according to the Financial Supervisory Service on Monday.The FSS data show that fixed-income securities issued by corporations amounted to some 7.9 trillion won in the first quarter of this year ending March 31, down more than 34 percent from a year ago.  Financial Supervisory Service headquarters in Seoul (Yonhap)The fall was attributable to a decline in th

April 25, 2016

The Korean government will accelerate fiscal reforms to better manage its tax revenue and budget through efficient capital allocation and planning as a means to boost its preparedness against slower growth and higher national debt.(Yonhap)In a meeting presided over by President Park Geun-hye at Cheong Wa Dae on Friday, the government will seek stronger fiscal discipline to ensure that its taxpayer money will not be wasted in the face of growing economic uncertainties.The Ministry of Finance said

April 22, 2016

Strategy and Finance Minister Yoo Il-ho said that Korea cannot afford to hold off structural reforms, stressing that this should not just slip by the public’s attention without merit.In an email to the employees of the Finance Ministry on Thursday -- the 100th day since his appointment as the country’s top fiscal policymaker, Yoo said that reforms in the public, labor, education and finance sectors are necessary for a country facing limited growth. Strategy and Finance Minister Yoo Il-ho (Yonhap

April 21, 2016

Haitai Confectionery & Foods, the seller of the hit snack Honey Butter Chip, said 80 percent of its initial public offering shares will be offered to retail and institutional investors.In a regulatory filing on Thursday, Haitai said it would be offering a total of 5.83 million shares worth about 72 billion won ($63.3 million), or 12,300 won per share at a face value of 500 won. NH Investment & Securities and Samsung Securities is Haitai’s IPO manager. Honey Butter Chips (Yonhap)Of the 80 percent

April 21, 2016

With no suitable or attractive assets to invest in amid low interest rates, the market is seeing more and more investors parking their money -- mostly savings -- into stock or mutual trust accounts offered by brokerages rather than banks’ savings accounts.Offering higher yields than deposit rates and relatively stable returns over the benchmark interest rates with flexible transactions, brokerages saw their outstanding balance of cash management accounts reach a record 52.6 trillion won ($46.3 b

April 20, 2016

Lotte Shopping said Tuesday it will sell its commercial building in Eunpyeong New Town, Seoul, to a real estate trust fund of KEB Hana Bank by the end of this month.Hana’s fund will purchase the property for 430 billion won ($380 million), according to a disclosure filing by Eunpyeong PFV Corp. Lotte Duty Free shop in downtown Seoul (Yonhap)Lotte Shopping’s Lotte Asset Development, a real estate developer of Lotte Group, set up the special purpose company -- Eunpyeong PFV Corp. -- to develop the

April 19, 2016

Korea Water Resources Corp. said Tuesday that it has received 119 billion won ($104 million) from the Ministry of Strategy of Finance to repay its debt for the construction and restoration of Korea’s four major rivers.The government agreed last September to provide a total of 340 billion won this year to the state-run K-water for debt repayments.The state-run water resources manager said that the 119 billion won was the first capital support from the Finance Ministry, and the rest of the 340 bil

April 19, 2016

Hite Jinro, a listed beer and soju maker, saw oversubscriptions of its bonds issued earlier this month, despite prospects of weaker-than-expected earnings and financial difficulties on high debt.Demand for Hite Jinro’s A-graded bonds exceeded 100 billion won ($87 million) the company had initially sought to raise to finance its operations and repay its debt.Its bonds have been oversubscribed by 25 billion won, with institutional investors such as Dongbu Securities, NH Investment & Securities and

April 18, 2016

With expectations of a Korean version of quantitative easing dashed as Korea’s conservative Saenuri Party failed to grab the majority of seats in the general elections, net selling of bond futures by foreign investors hit a record high last week.According to the Korea Exchange, foreign investors unloaded 6,856 contracts of 10-year Korean Treasury Bond Futures and 16,495 contracts of 3-year bond futures after the legislative election last week.“Foreign investors changed their positions as the pos

April 18, 2016

Hana Financial Group said Sunday that it has joined notable financial companies in a consortium to apply and standarize innovative financial technologies.The “R3 CEV” group consists of 43 financial conglomerates, including Citigroup, Bank of America, JP Morgan Chase, Goldman Sachs and UBS. Hana Financial Group (Yonhap)Hana Financial will be participating in this group to apply emerging blockchain technology into services such as global transactions and security protection. Blockchain enables sto

April 17, 2016

Korea’s Finance Minister Yoo Il-ho said that the government will aggressively push forward with restructuring financially vulnerable companies, making this its top priority with the general election over. The top fiscal policymaker added that it will begin with Korea’s shipping companies that face liquidity crises, saying that he is most concerned with Hyundai Merchant Marine, which is undergoing a self-rescue plan with conditions by its creditors. Korea’s Finance Minister Yoo Il-ho (Yonhap)“I w

April 17, 2016

Finance Minister Yoo Il-ho said that South Korea’s national debt in proportion to its gross domestic product is relatively low compared with other major economies.  Finance Minister Yoo Il-ho (Yonhap)Its largest trading partner China, which is undergoing structural changes to focus on spurring domestic consumption rather than exports, will have a positive effect on Asia’s fourth-largest economy. Korea’s benchmark interest rate of 1.5 percent is also higher than most other economies, he noted.“Ko

April 13, 2016

POSCO said Tuesday that its biggest shareholder -- the National Pension Service -- has increased its ownership in the steel giant, from 10.04 percent to 10.22 percent.In 2015, the NPS, the country’s pension manager, owned a 9.04 percent stake in POSCO, according to an audit filing.By Park Hyong-ki (hkp@heraldcorp.com)

April 12, 2016