ID :
19838
Wed, 09/17/2008 - 09:34
Auther :
Shortlink :
http://m.oananews.org//node/19838
The shortlink copeid
S. Korea orders Lehman Brothers to halt operations
(ATTN: CORRECTS typo in lead)
SEOUL, Sept. 16 () -- South Korean government officials vowed to make major efforts on Tuesday to allay market fears of a possible financial crisis after Lehman Brothers Holdings Inc. filed for bankruptcy in the United States.
Lehman, once the fourth-largest investment bank in the U.S., collapsed on Monday
under heavy exposure to mortgage-related holdings worth US$60 billion. Its
operations in South Korea were suspended by the nation's financial regulator.
"The next six to 12 months will be extraordinarily difficult for markets and
the global economy," said Mark Zandi, chief economist at Moody's
Economy.com.
"But, what this past week's events signal is less likely the unraveling of
the financial system than the beginning of the end of this unprecedented
crisis," the economist said.
In Seoul, stock prices fell sharply and the Korean currency's value against the
U.S. dollar nosedived as concerns escalated about the soundness of the U.S.
financial system.
As South Korean markets closed on Monday for a public holiday, Tuesday was the
first day for investors here to respond to the collapse of Lehman. Investors were
also concerned about news that U.S. insurance giant American International Group
Inc. was struggling to survive.
In the wake of the growing unease, government officials have tried to calm the
markets, saying the Lehman's demise would probably erase uncertainties in global
financial markets in the long term.
"In the long term, it could contribute to the easing of the credit crunch by
quickly removing market instability," Vice Finance Minister Kim Dong-soo
told reporters, referring to the U.S. bank's collapse.
Earlier in the day, the Financial Services Commission said it banned the two
Lehman units in Seoul from selling their assets and repaying debts until Dec. 15.
The measure was aimed at "protecting investors at home and preventing
potential chaos in local financial markets," the commission said in the
statement.
Lehman's Seoul units will also be prohibited from receiving deposits, trading
stocks and transferring money overseas, the commission said.
In spite of the government's comments, the nation's benchmark stock index dropped
6.1 percent to close at 1387.75 with banking and brokerage shares leading the
sharp decline. Some media reports say South Korean securities firms would lose
billions of dollar in securities linked to Lehman.
Officials at Lehman's South Korean unit weren't immediately available for comment.
Hit by the sharp drop, program trading of shares listed on both the benchmark
KOSPI and secondary KOSDAQ markets was suspended for five minutes in the morning
trading session.
The Korean won currency also plunged by 50.9 won to close at 1,160.0 versus the
U.S. dollar, marking the biggest one-day loss since August 1998, as local banks
scrambled to buy the U.S. currency.
"The situation in the U.S. financial markets appears to be bad because
Lehman filed for bankruptcy only three days after it announced a plan to sell its
assets," said Shim Jae-yeop, a senior analyst at Meritz Securities Co. in
Seoul.
Shim said he couldn't rule out the possibility of more failures in other U.S.
financial companies linked to transactions with Lehman.
The nation's finance ministry and the Bank of Korea said they would act "if
necessary."
The vice finance minister Kim said his government will provide liquidity to
stabilize the nation's financial markets in the wake of Lehman's collapse.
"The government and the Bank of Korea will take steps against excessive
fluctuations in foreign exchange markets," Kim said in a breakfast meeting
with officials from the financial regulator and the central bank.
The presidential office of the Blue House said it will hold an emergency meeting
with economy-related ministers later in the day to discuss potential measures to
stabilize the markets.
As of the end of July, the Lehman units in Seoul had a total of 1.6 trillion won
($1.44 billion) in assets from investors, it said.
South Korean financial companies held about $720 million in securities linked to
Lehman, the commission said on Monday.
SEOUL, Sept. 16 () -- South Korean government officials vowed to make major efforts on Tuesday to allay market fears of a possible financial crisis after Lehman Brothers Holdings Inc. filed for bankruptcy in the United States.
Lehman, once the fourth-largest investment bank in the U.S., collapsed on Monday
under heavy exposure to mortgage-related holdings worth US$60 billion. Its
operations in South Korea were suspended by the nation's financial regulator.
"The next six to 12 months will be extraordinarily difficult for markets and
the global economy," said Mark Zandi, chief economist at Moody's
Economy.com.
"But, what this past week's events signal is less likely the unraveling of
the financial system than the beginning of the end of this unprecedented
crisis," the economist said.
In Seoul, stock prices fell sharply and the Korean currency's value against the
U.S. dollar nosedived as concerns escalated about the soundness of the U.S.
financial system.
As South Korean markets closed on Monday for a public holiday, Tuesday was the
first day for investors here to respond to the collapse of Lehman. Investors were
also concerned about news that U.S. insurance giant American International Group
Inc. was struggling to survive.
In the wake of the growing unease, government officials have tried to calm the
markets, saying the Lehman's demise would probably erase uncertainties in global
financial markets in the long term.
"In the long term, it could contribute to the easing of the credit crunch by
quickly removing market instability," Vice Finance Minister Kim Dong-soo
told reporters, referring to the U.S. bank's collapse.
Earlier in the day, the Financial Services Commission said it banned the two
Lehman units in Seoul from selling their assets and repaying debts until Dec. 15.
The measure was aimed at "protecting investors at home and preventing
potential chaos in local financial markets," the commission said in the
statement.
Lehman's Seoul units will also be prohibited from receiving deposits, trading
stocks and transferring money overseas, the commission said.
In spite of the government's comments, the nation's benchmark stock index dropped
6.1 percent to close at 1387.75 with banking and brokerage shares leading the
sharp decline. Some media reports say South Korean securities firms would lose
billions of dollar in securities linked to Lehman.
Officials at Lehman's South Korean unit weren't immediately available for comment.
Hit by the sharp drop, program trading of shares listed on both the benchmark
KOSPI and secondary KOSDAQ markets was suspended for five minutes in the morning
trading session.
The Korean won currency also plunged by 50.9 won to close at 1,160.0 versus the
U.S. dollar, marking the biggest one-day loss since August 1998, as local banks
scrambled to buy the U.S. currency.
"The situation in the U.S. financial markets appears to be bad because
Lehman filed for bankruptcy only three days after it announced a plan to sell its
assets," said Shim Jae-yeop, a senior analyst at Meritz Securities Co. in
Seoul.
Shim said he couldn't rule out the possibility of more failures in other U.S.
financial companies linked to transactions with Lehman.
The nation's finance ministry and the Bank of Korea said they would act "if
necessary."
The vice finance minister Kim said his government will provide liquidity to
stabilize the nation's financial markets in the wake of Lehman's collapse.
"The government and the Bank of Korea will take steps against excessive
fluctuations in foreign exchange markets," Kim said in a breakfast meeting
with officials from the financial regulator and the central bank.
The presidential office of the Blue House said it will hold an emergency meeting
with economy-related ministers later in the day to discuss potential measures to
stabilize the markets.
As of the end of July, the Lehman units in Seoul had a total of 1.6 trillion won
($1.44 billion) in assets from investors, it said.
South Korean financial companies held about $720 million in securities linked to
Lehman, the commission said on Monday.
