Korea

Standard Chartered's chief financial officer in South Korea will replace retiring chief executive next month.

Cost-cutting scheme of two banks has been proven effective in reducing bad loans.

According to Reuters, Woori Finance is currently 73 percent owned by the South Korean government.

Korea Exchange Bank now facilitates Won withdrawals from foreign currency accounts using CDs and ATMs with its new KRW IC Cards.

South Korea's fourth-largest Hana Financial Group Inc., which on Monday announced that it was giving a thought on a rights offer, is considered to be preparing for an M&A bid, as reported in Xinhua . "As part of our capital plan, we are considering a rights offer in a range that won't damage the total shareholder value," Hana said in a regulatory filing. Local observers expect that the amount of rights offering may reach up to 2 trillion won ($1.7 billion), the media said. Hana's capital adequacy ratio and tier-1 capital ratio posted 12.1 percent and 8.1 percent, respectively, as of end-June, standing far above the level recommended by the nation's financial watchdog, which suggested the offers may not be related to improvement in the bank's capital sound, according to the media. With the money raised from the offer, Hana is likely to pursue financing an acquisition of a bank or a financial group, it said. Hana did not accept or reject the speculation.

A slew of high yield term deposits sold by Kookmin say its net interest margin fall by half a percent in Q2 and profit slump over 60 percent.

South Korea's regulator has warned banks they have to act quickly to rein in bad loans as ratio hits four-year high.

Korea Exchange Bank wants to enhance its competitiveness in mergers and acquisitions and in acquisition financing through partnership with Samsung Securities Co.

Banco Santander now has a Seoul office to serve as liaison between Korean corporate and official institutions and Grupo Santander’s global network. It will also provide support to Santander clients doing business in Korea.

If you are Korean and broke, go elsewhere is the message, as Kookmin and Shinhan close 164 regular branches in favour of bigger “wealth centres” catering to upmarket clients.

BNP Paribas Assurance has increased its equity interest in SHC&Life Insurance from 50 percent to 85 percent.

From the Middle East to London, to New York, and now to South Korea.

Korea’s banking sector may have nothing to do with Tom Cruise, star of the film Risky Business or his penchant for the occult for that matter, but one thing is certain, loans are becoming a risky business for Woori Financial Group. So far this year, Woori has been plagued with a spate of non-performing loans or NPL’s and the nasty little critters just don’t seem to be going away. A worrying trend seems to be developing at the bank with a dramatic increase in new NPL formation to USD616 million in the third quarter of 2008. So why should Woori worry? Should new NPL formation exceed USD771 million in the subsequent financial quarters of 2009 and provision rates escalate above 60 percent, provisions in the realm of USD463 million per quarter could be a realistic scenario in the next 18 months or so, according to UBS analyst, SoYoung Kim. Kim expects there to be a “higher level of provisions at USD494 million in the fourth quarter of 2008 as this period will see more SME bankruptcies, particularly as borrowers face year-end audits and scrutiny.” The Korean lender just happens to have the largest SME loan portfolio of all Korean banks at USD72 billion. So how will the increase in new NPL’s and provisions affect Woori’s bottom line? The bank is expected to hit losses in the fourth quarter of 2008 and this coupled with the possibility that 2009 provisions may be front-loaded to the first quarter of 2009 could result in “Woori’s Tier 1 ratio dropping from 7.6 percent down to 6.4 percent,” said Kim. So what can Woori do to perk up its Tier 1 ratio? The bank needs over USD1.5 billion in new Tier 1 capital in order to lift its ratio above 7.5 percent. “Woori may need to issue Tier 1 equity in 2009 in a range of USD1.5 trillion,” which represents 34 to 42 percent of its current market cap,” said Kim. While it seems like Woori and other banks are never too far from the bad news, the Korean lender should be able to breathe a sigh of relief now with earnings expected to jump from USD77 to USD193 milllion in the second quarter of 2009 and NPL’s remaining “relatively low at 0.8 percent of USD2 billion in loans,” said Kim.