-
Sep 11, 1998
- Merger between the Kookmin & the Korea Long Term Credit bank
- 1. The Highlight of the MergerKookmin Bank (“Kookmin”) and Korea Long Term Credit Bank (“KLB”) exchanged the Memorandum of Understanding and formally announced to proceed with the merger of the two banks at the convention center in the Korea Federation of Banks building on September 11, 1998.Mr. Dal-Ho Song, the President of Kookmin, and Mr. Sei Jong Oh, the President of KLB announced that the two banks have agreed on a voluntary merger to become a “super bank” which will overcome the adverse changes in the current environment surrounding Korean banking industry as well as play a pivotal role in the future economy of Korea.Kookmin and KLB have been taking up a leading position in retail consumer banking and wholesale corporate banking, respectively. Therefore, no other domestic consolidation could bring about greater synergy effect than the merger between these two banks.The two banks made a statement that, even after the merger, they will continue their efforts to seek for a strategic alliance with foreign partners in order not only to solidify their capital base but to enhance their operations system to an advanced one. They also stated that they will endeavor to minimize the government’s financial assistance for the financial restructuring by maximizing the size of the foreign capital inducement.2. A New Model of ConsolidationThe merger between Kookmin and KLB, both of which are regarded as the best in their respective fields, is the accouplement of a retail specialist and a corporate professional. This type of merger is unprecedented in the history of Korea’s banking industry. Unlike the other merger cases which mostly aimed for achieving a cost effectiveness, the combination of Kookmin and KLB is targeted to accomplish the amalgamation of each client base and the diversification of financial products.This merger will open a new era in the history of Korean banking foretelling the birth of a super sound bank that will lead the banking industry in
-
Sep 09, 1998
- Meger between the Hana Bank & the Boram Bank
- On September 8, 1998, Hana Bank ranked 11th in terms of total assets, and Boram Bank, ranked 13th, have exchanged a Memorandum of Understanding for a merger between the two banks.The merger represents birth of a leading nationwide commercial bank with a competitive position in the international banking operations. The combination of Hana Bank's top ranking profitability and Boram Bank's top ranking customer satisfaction will allow the merged bank to provide quality services to its customers with an optimal level of satisfaction by equipping the combined network of approximately 250 branches nationwide with advanced financial products and services.To effectively meet the needs of middle to high income individual customers and small to medium sized corporates, the merged bank aims to become a Financial Services Group by the year 2002 with total assets of over KRW 100 trillion and total capital of over KRW 4 trillion by setting up businesses specializing in insurance, mortgage lending, mutual fund management, discount brokerage, asset management and investment banking either through MAs or establishment of subsidiaries.During the merger process, the government will extend its full and direct support to the two banks by means of purchasing much of its bad assets, thus improving both profitability and asset quality of the merged bank. Based on this combined profitability and asset quality, the Banks will consider promotion of an additional MA, increase of capital and acquisition of foreign capitals. Not only the merged bank will further increase its capital in addition to the recent acquisition of a foreign capital from an internationally reputable institution, IFC who has become the second largest shareholder of Hana Bank, but also will effectively utilize an overall risk management procedures adopted through IFC.In line with raising its profitability, the merged bank will adopt a system in which the corporate structure will be reorganized into independent business unit
-
Sep 02, 1998
- Financial Restucturing in Korea
- The government will finalize core tasks relating to financial restructuring, including the extension of fiscal support, by the end of September and starting from October will implement measures to alleviate credit crunch and pursue normalization of intermediary function of the financial market.I. Bank Restructuring Plan1. 5 Resolved Banks- Assets/Liabilities due diligence, currently under progress, will be completed by September 25, whereas financial support will be provided to banks by the end of September.o About 2,800 employees, approximately 32% of acquired bank's total employees amounting to 8,950 (a total of 10,260 including temporary employees) will be taken over by the acquiring banks.¡¤ As of August 31, 1,517 employees of the acquired banks have signed employment contracts with acquiring banks.2. 7 Conditionally Approved Banks- Commercial Bank of Korea, Hanil Banko These 2 banks have submitted a merger application to FSC on August 25 and upon conclusion of related procedures, including announcement on request for creditors' discontent application, a shareholders' general meeting will be held for approval of merger on September 30.o Fiscal support will be provided for in order to prevent existing problems carrying over to the merged bank and to maximize synergy effect.¡¤ Management improvement measures which will have the effect of bringing productivity and earning potential of the merged bank up to that of advanced countries' banks will be required as a condition for fiscal support (productivity parameter represented by operational revenue per employee is to be utilized when setting level of layoffs required).- Cho Hung Bank, Korea Exchange Banko 2 banks are required to submit revised implementation plans including more detailed recapitalization and merger plans by August 31.o The bank(s) will be required to submit a memorandum indicating intention of dismissal of all bank management in the event foreign capital inducement or merger plans are not realiz
-
Jul 31, 1998
- Merger between the Commercial Bank of Korea & the Hanil Bank
- On September 8, 1998, Hana Bank ranked 11th in terms of total assets, and Boram Bank, ranked 13th, have exchanged a Memorandum of Understanding for a merger between the two banks.The merger represents birth of a leading nationwide commercial bank with a competitive position in the international banking operations. The combination of Hana Bank's top ranking profitability and Boram Bank's top ranking customer satisfaction will allow the merged bank to provide quality services to its customers with an optimal level of satisfaction by equipping the combined network of approximately 250 branches nationwide with advanced financial products and services.To effectively meet the needs of middle to high income individual customers and small to medium sized corporates, the merged bank aims to become a Financial Services Group by the year 2002 with total assets of over KRW 100 trillion and total capital of over KRW 4 trillion by setting up businesses specializing in insurance, mortgage lending, mutual fund management, discount brokerage, asset management and investment banking either through MAs or establishment of subsidiaries.During the merger process, the government will extend its full and direct support to the two banks by means of purchasing much of its bad assets, thus improving both profitability and asset quality of the merged bank. Based on this combined profitability and asset quality, the Banks will consider promotion of an additional MA, increase of capital and acquisition of foreign capitals. Not only the merged bank will further increase its capital in addition to the recent acquisition of a foreign capital from an internationally reputable institution, IFC who has become the second largest shareholder of Hana Bank, but also will effectively utilize an overall risk management procedures adopted through IFC.In line with raising its profitability, the merged bank will adopt a system in which the corporate structure will be reorganized into independent business unit
-
Jul 01, 1998
- Strengthening of Prudential Supervision of Foreign Exchange
- 1. BackgroundRisks accompanying foreign exchange operations are mounting in Korea due to increased multi-national transactions, financial deregulation, tougher competition among financial institutions and the introduction of derivatives.However, foreign exchange management by the Foreign Exchange Management Act has been enforced mainly through focusing on aspects of the management of external assets and liabilities.○ The supervision of foreign exchange operations, executed mainly by the central bank, has given more weight to the stability of the foreign exchange market and monetary policy, rather than to assuring the soundness of commercial banks.〓 The supervisory function was not sufficient to manage the various risks, which may arise in foreign exchange operations, such as exchange risk, credit risk, liquidity risk, market risk, etc..○ It is necessary to strengthen prudential supervision over banks' foreign exchange operations, in order to prevent recurrence of the foreign exchange crisis through efficient management of the risks inherent in foreign exchange operations.2. Contents◎ In order to efficiently manage various risks in foreign exchange operations, the Banking Supervisory Authority is taking comprehensive measures.○ The foreign currency liquidity regulation system will be modified to enforce the Maturity Mismatches(GAP) Regulation, as well as the Foreign Currency Liquidity Ratio Regulation.○ The banks will set up and manage the limits on their foreign exchange operations under the Guidelines of the Banking Supervisory Authority.○ The Banking Supervisory Authority is also strengthening its off-site surveillance by improving banks' reporting systems, in order to facilitate risk evaluation and assure the soundness of foreign exchange operations in commercial banks.1) Strengthening of supervision on liquidity riskIntroduction of the Maturity Mismatches(GAP) Regulation○ After dividing assets and liabilities into 7 buckets1) according to their r
-
Jun 29, 1998
- FSC Press Release upon Ailing Bank Resolution
- ■ Final assessment results of the Bank Appraisal Committee were reported to the Financial Supervisory Commission on June 28, 1998. A special meeting of the Financial Supervisory Commission was held at 7:00 am on June 29, 1998 and utilizing input from the committee decided the following;○Banks whose rehabilitation plans are deemed feasible, such as Cho Hung Bank, Commercial Bank of Korea, Hanil Bank, Korea Exchange Bank, Peace Bank of Korea, Kangwon Bank and Chungbuk Bank each received conditional approval of rehabilitation plan and are required to submit an implementation plan containing strong management improvement plans by the end of July'○Banks whose rehabilitation plans are deemed not feasible, such as Dong Hwa Bank, Dongnam Bank, Dae Dong Bank, Chung Chong Bank and Kyungki Bank each received disapproval of rehabilitation plan and will have to transfer their assets and liabilities to Shinhan Bank, Housing Commercial Bank, Kookmin Bank, Hana Bank, Koram Bank, respectively■The government will exert utmost effort in minimizing clients' inconveniences during the course of bank resolution by implementing following measuresNot only payment settlement and deposit repayment businesses but also businesses of overdraft and bill discount will be carried out as normalIn order to restore financial market stability as soon as possible, liquidity situation will be improved and credit extention toward corporate clients of resolved banks will be enhanced1. Progress to-date■Submission of rehabilitation plans (April 30, 1998)○12 banks with BIS ratio that fell short of 8% as of December 1997 were required to submit rehabilitation plans■Accounting firms' evaluation on rehabilitation plans (May 1 - June 8, 1998)○In accordance to evaluation criteria agreed upon with the IBRD, the feasibility of the following elements were evaluated - capital adequacy, recapitalization plan, asset quality classification, reduction plan for risky assets, cost reduction scheme, managemen
-
Jun 29, 1998
- FSC Chairman`s Announcement Upon Bank Resolution
- Our country as a whole has brought out all its wisdom to cope with the recent foreign exchange crisis. However, we continue to witness considerable weaknesses in our financial and corporate sectors and there are still signs of structural problems embedded in our system. As a result, we are currently in a liquidity crunch and the economy has yet to turn around.As a way to break away from structural impediments and vicious circle of degradation and to ultimately strengthen economic fundamentals, the government with unprecedented commitment has underwent structural reform with key focus on the financial and corporate sectors restructuring.On June 18th, 55 corporations were identified as non-viable in accordance to the assessments conducted by creditor banks. Today based on bank appraisal committee's evaluation of rehabilitation plans submitted by each bank, I would like to unveil the results as follows.Cho Hung Bank, Commercial Bank of Korea, Hanil Bank, Korea Exchange Bank, Peace Bank of Korea, Kangwon Bank, Chungbuk Bank, a total of 7 banks will be subject to conditional approval on its rehabilitation plan and will have to prepare and submit implementation plans including strong reformative actions and recapitalization commitments by the end of July. After that in case this plan is disapproved or not implemented to a satisfactory level a business transfer or merger order will be imposed on the bank.Banks such as Dong Hwa Bank, Dongnam Bank, Dae Dong Bank, Chung Chong Bank and Kyungki Bank whose rehabilitation plans were disapproved will be ordered to have its assets and liabilities transferred to Shinhan Bank, Housing Commercial Bank, Kookmin Bank, Hana Bank, Koram Bank, respectively.Throughout this transitional process the government will exercise its utmost effort to protect bank savings and ensure that customers will be able to attend business at these banks as usual.To this end, despite of the fact that the resolved bank's good assets and liabilities will be tran
-
May 21, 1998
