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Jul 01, 2005
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Jun 23, 2005
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Jun 22, 2005
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Jun 01, 2005
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May 27, 2005
- FSC Action on Leading Investment & Securities’ Applications for Share Acquisition and Merger with Bridge Securities
- The Financial Supervisory Commission announced on May 27 that it had decided not to give regulatory approval to the applications by Leading Investment Securities Co., Ltd. to acquire shares of Bridge Securities Co., Ltd. and merge with the company.Leading Investment Securities Co., Ltd. stated in the business plan it submitted to the FSC that it envisioned a sharp turnaround after the proposed merger with Bridge Securities (cumulative three-year net income totaling KRW33.9 billion following the merger). Leading Investment Securities also anticipated securities underwriting and investment banking as its key revenue sources.The FSC noted that the two companies incurred large net cumulative losses totaling KRW58.4 billion between April 2002 and December 2004 from mostly engaging in securities brokerage and dealings. The FSC further noted that the amount of financing put forth by Leading Investment Securities to complete the merger (KRW149.4 billion), including share purchases, restructuring expenses, and share buybacks, can be covered only by disposing of nearly all of the liquid assets of the merged company (KRW156.1 billion). Because the merged company would then be left only with illiquid assets such as unlisted shares and physical assets, it is unrealistic to expect the company to engage in normal securities dealings and underwriting activities, both of which typically require substantial financial resources.Furthermore, the recent increase in share buyback price Leading Investment Securities proposed for the shareholders of Bridge Securities as well as other merger expenses raise serious doubts about post-merger liquidity positions of the company. It was also determined that revenue outlook for the company was uncertain given the planned downsizing of branch operations and underwriting business and a lack of experience in and specific business strategies for investment banking.After taking into consideration the asset structure, the underlying business strength an
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May 10, 2005
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Apr 25, 2005
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Apr 07, 2005
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Apr 01, 2005
- Correction to March 31 Financial Times Article "Seoul's new rules anger overseas investors" by Anna Fifield
- The FSC/FSS and the Ministry of Finance and Economy hereby issue a correction to March 31 Financial Times article entitled “Seoul’s new rules anger overseas investors.” The article misinterprets the recently amended “5% rule,” labeling it a “draconian” requirement and a move designed to tighten controls on foreign investors. In particular, the article stretches the 5% rule to suggest that it was connected to the equity investment in SK Corp. by Sovereign Asset Management and the gains recently achieved by Newbridge Capital after selling its stakes in Korea First Bank.The 5% rule was first established with an amendment to the Securities and Exchange Act in 1991. The newly amended 5% rule was passed by the National Assembly on December 31, 2004, promulgated on January 17, 2005, and took effect on March 29, 2005.It is important to note that the 5% rule is widely adopted and enforced in many countries—particularly stringently in the U.S.—and Korea’s 5% rule is modest with respect to the kinds of disclosure compliance it requires from investors. Thus, the assertion made in the FT article that Korea’s 5% rule is “draconian” is a hyperbole and a mischaracterization that can only be expected from uninformed or misinformed observers.Moreover, as the FSC/FSS has pointed out on numerous occasions, the changes adopted to the 5% rule were intended only to replace broadly worded provisions with more specific and unequivocal rules. It was never intended to control the “pernicious” effects of foreign capital as the article falsely asserted.The FSC/FSS and the Ministry of Finance and Economy further note that the amended 5% rule is part of the ongoing effort to raise Korea’s corporate governance to the highest global standards. It is not related in any way to particular foreign investors and is applied equally and fairly to all investors, domestic and foreign. It is certainly not intended to tighten controls on foreign investors.The FSC/FSS and the Mi
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Mar 15, 2005
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Mar 10, 2005
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Feb 17, 2005
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Feb 03, 2005
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Feb 02, 2005
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Jan 18, 2005
- FSS Announces Major Organization & Workforce Changes
- The FSS announced the results of the organization and workforce innovation initiative that was launched in October of 2004 to renew and reinvigorate the FSS as an efficient and effective supervisory organization backed by a highly specialized workforce capable of meeting the ever-growing demands and challenges of the marketplace.The organization and workforce innovation initiative, prompted and driven by the growing market demand for highly efficient and specialized supervisory services, brings about a number of major changes to the current examination structure, seeks greater synergy from the integrated supervision, creates a macro-supervision department to help formulate forward-looking supervisory policies, and institutes workforce changes that stress performance-based personnel management and pay. To provide independent perspectives and expertise in implementing the organization and workforce initiative, A.T. Kearney participated in the initiative as an outside consultant.SUMMARY OF ORGANIZATIONAL INNOVATION1. Reorganization of the examination structureThe examination staff and departments are restructured with the goal of enhancing the ability of the examiners to conduct onsite examinations “whenever necessary, to the extent necessary, and with the examiners necessary” on the basis of the continuous surveillance of financial institutions and to minimize the burden financial institutions face in complying with FSS examinations. The examination teams, which are divided into offsite surveillance and onsite examination teams, are merged together to enable the examiners to carry out both offsite surveillance and onsite examination simultaneously. With the transition to the “relationship manager” system, each examination team is to be assigned specific financial institutions to monitor and examine. An examination support department, staffed by examiners with technical expertise in risk management, IT and other specialized areas, is also newly created to suppo
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Dec 07, 2004
- Domestic Banks Report Net Income Totaling KRW5,679.3 Billion for the First Three Quarters of 2004
- Domestic banks reported net income totaling KRW5,679.3 billion for the first three quarters of the year, up KRW4,075.4 billion from KRW1,603.9 billion a year earlier. Higher interest income from increased lending amid stable interest rate spreads, a drop in provisioning for problematic loans and a jump in investment income and bancassurance revenues helped to push the net income higher. The ROA of the 19 domestic banks averaged 0.74%, compared with 1.38% for U.S. commercial banks (first half, 2004) and 1.25% for the top 5 banks of the U.K. (2003).Loans classified as substandard or below (SBL) fell KRW1,059.1 billion to KRW17,619.3 billion from KRW18,678.4 billion at the end of 2003. The ratio of SBL to total loans outstanding (SBL ratio) also fell to 2.37% from2.63% during the same period on a large drop in SBL related to SK Networks and a general improvement in loan asset soundness.* Please refer to the attached PDF for details.
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Sep 23, 2004
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Sep 22, 2004
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Sep 20, 2004
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Sep 10, 2004
- Findings of General Examination on Kookmin Bank
- The Financial Supervisory Service conducted a general examination on Kookmin Bank from April 7 to May 12, 2004, with a particular focus on the bank’s management status evaluation and its compliance with the Banking Act and other pertinent laws and regulations. The findings of the general examination are summarized as follows:1. Results of the Management Status EvaluationThe overall rating for Kookmin Bank’s management status evaluation as of the end of March 2004 fell by one grade from the previous overall rating Kookmin Bank received at the end of September 2002. Because of weaknesses in the bank’s asset quality, profitability, capital adequacy and business management, more than the customary disciplinary warning is required to appropriately address them.In particular, the bank’s asset quality significantly deteriorated. As of the end of March 2004, the loan default ratio (defaulted loans over total loans outstanding) was 4.42%, and the ratio of loans classified as substandard or below (sum of loans classified as substandard, doubtful or presumed loss over total loans outstanding) reached 4.24%, comparatively higher than those of other banks. These ratios reflect structural weaknesses in the bank’s loan portfolio burdened by exposures to economy-sensitive sectors (e.g., credit card, households, and small and medium-sized companies) and high -risk businesses as well as realization of distress in the bank’s credit card business with relatively large potential losses.Mostly as a result of deteriorating asset quality and loan -loss provisioning, Kookmin Bank recorded net loss of KRW753.3 billion for 2003. For the first half of 2004, Kookmin Bank’s net income came to KRW307.6 billion, which is comparatively smaller than net income reported by other banks. For the year from April 2003 to March 2004, Kookmin Banks’ ROA was -0.52%.As of the end of March this year, Kookmin Bank’s BIS capital adequacy ratio fell below the 10.86% average to 10.11% mostly as
