ID :
21195
Thu, 09/25/2008 - 17:53
Auther :
Shortlink :
http://m.oananews.org//node/21195
The shortlink copeid
Korean banks urged to hold off mergers, acquisitions
SEOUL, Sept. 25 (Yonhap) -- South Korea's top financial regulator urged local banks Thursday to refrain from inflating their assets through acquisitions, saying recent moves to increase their size are excessive.
"It is true that a bank should have a certain level of assets to gain global
competitiveness, but they (local banks) are putting too much weight on the size
of assets," Jun Kwang-woo, chairman of the Financial Services Commission, said in
an interview with Yonhap News Agency.
"The financial service sector's competitiveness should be sought after on the
basis of soundness," he said.
His comments come amid a slowing South Korean economy and slumping financial
markets, both of which are due mainly to concerns about a global credit crisis.
Jun said earlier the regulator was not against mergers and acquisitions, but
wanted to ensure firms did not take on too much risk that could potentially
impact the economy.
The regulator's comments may prod South Korean lenders to reconsider their plans
to acquire local rivals.
South Korean banks have been accelerating moves to buy small foreign banks and
local non-banking financial services firms over the last year to increase their
size.
Recently, Kookmin Bank, the country's top lender, has expressed interest in
taking over Korea Exchange Bank (KEB) after HSBC Holdings Plc said last week it
terminated a deal to buy a 51.02 percent stake in the bank, citing falling asset
values amid global financial market turmoil.
Local banks have been showing keen interest in state-owned financial services
firms such as Korea Development Bank and Woori Finance Holdings that the
government plans to begin selling off later this year.
Jun said the government will continue to make efforts towards financial
deregulation in a bid to strengthen competitiveness and to attract foreign
investment, and will also beef up supervision.
He said plans to ease regulations on bank ownership will be announced next week.
Current regulations forbid a non-financial company from holding more than 4
percent of shares with voting rights in a bank, while financial firms are
permitted to own up to 10 percent of a bank.
"The proposed plan will help banks tap various fundraising channels," Jun said of
the deregulation efforts, adding they will also help make ownership structures
more flexible.
According to industry sources, the watchdog is considering allowing non-financial
companies to own up to 10 percent of a given bank.
sam@yna.co.kr
(END)
"It is true that a bank should have a certain level of assets to gain global
competitiveness, but they (local banks) are putting too much weight on the size
of assets," Jun Kwang-woo, chairman of the Financial Services Commission, said in
an interview with Yonhap News Agency.
"The financial service sector's competitiveness should be sought after on the
basis of soundness," he said.
His comments come amid a slowing South Korean economy and slumping financial
markets, both of which are due mainly to concerns about a global credit crisis.
Jun said earlier the regulator was not against mergers and acquisitions, but
wanted to ensure firms did not take on too much risk that could potentially
impact the economy.
The regulator's comments may prod South Korean lenders to reconsider their plans
to acquire local rivals.
South Korean banks have been accelerating moves to buy small foreign banks and
local non-banking financial services firms over the last year to increase their
size.
Recently, Kookmin Bank, the country's top lender, has expressed interest in
taking over Korea Exchange Bank (KEB) after HSBC Holdings Plc said last week it
terminated a deal to buy a 51.02 percent stake in the bank, citing falling asset
values amid global financial market turmoil.
Local banks have been showing keen interest in state-owned financial services
firms such as Korea Development Bank and Woori Finance Holdings that the
government plans to begin selling off later this year.
Jun said the government will continue to make efforts towards financial
deregulation in a bid to strengthen competitiveness and to attract foreign
investment, and will also beef up supervision.
He said plans to ease regulations on bank ownership will be announced next week.
Current regulations forbid a non-financial company from holding more than 4
percent of shares with voting rights in a bank, while financial firms are
permitted to own up to 10 percent of a bank.
"The proposed plan will help banks tap various fundraising channels," Jun said of
the deregulation efforts, adding they will also help make ownership structures
more flexible.
According to industry sources, the watchdog is considering allowing non-financial
companies to own up to 10 percent of a given bank.
sam@yna.co.kr
(END)
