Asia Pacific

While financial authorities continue to push forward their efforts to clean up Korea’s messy secondary banking sector, it remains to be seen whether they could properly finish what they started, The Korea Times reported. In its latest attempt to purge secondary lenders that were crippled by exposure to the country’s toxic property sector, the Financial Supervisory Service (FSS) suspended the Solomon Savings Bank, Mirae Savings Bank, Korea Savings Bank and Hanju Savings Bank Sunday. This extended the list of savings banks shelved by financial regulators to 20.

Despite relatively strong economic growth, risks for banks are growing in Asia. Among the risks are a big increase in lending in recent years, rising individual debt levels in the region, headwinds from the European debt crisis and a slowdown in China. Investors and analysts are watching the numbers closely, and while only a few see a big spike in bad debts, many are worried profits may be squeezed, particularly if there are more hiccups in the global economy. Bankers across Asia agree losses will rise but only modestly.

The prosecution said Thursday it will launch an investigation into savings banks subject to business suspension as early as next week. Now, up to four savings banks are expected to face administrative measures imposed by the Financial Supervisory Service (FSS), prompting concerns over another bank run, The Korea Times reported. “Basically, we will launch a probe at the request of the financial regulator after they announce the list of savings banks for business suspension,” a prosecutor said.

A group of bondholders of bankrupt Japanese semiconductor maker Elpida Memory Inc have threatened to thwart the auction of the company's assets if trustees agree to a reported selling price of 150 billion yen ($1.9 billion), Reuters reported. In a filing to a Tokyo district court on April 27, the bondholders said they could submit a rival reorganisation plan if the bankruptcy trustees agreed to a low-ball bid that would "unintentionally transfer great value to the winning sponsor".

China's Hony Capital plans to sell or outsource the operations at Elpida Memory's Hiroshima DRAM plant to Semiconductor Manufacturing International Corp (SMIC) if its bid for the bankrupt Japanese chipmaker is successful, the Nikkei business daily said on Tuesday. The scenario involving Hony, which is bidding along with fellow private equity firm TPG Capital, and China's top chipmaker, was drawn up by the Chinese government, the Nikkei said citing a banking source, and is one of a few being mentioned surrounding the takeover of Elpida.

Australia's slowing economy was given a shot in the arm Tuesday when the central bank cut a hefty half-percentage point from official interest rates, signaling a shift in its focus away from fighting inflation and toward safeguarding growth amid an uncertain global outlook, The Wall Street Journal reported.

Embattled miner Kagara has gone into voluntary administration after failing to meet its debt obligations, putting up to 325 jobs at risk, The Australian. The Perth company announced yesterday it had appointed Taylor Woodings as voluntary administrator after suspending its shares from trading last week because it had failed to refinance a $40 million debt facility with ANZ. Administrator Michael Ryan said the administration process would provide the company and stakeholders with breathing space and protection to make decisions about the future in a considered way.

National Australia Bank illustrated the tough market facing sellers of UK banking assets on Monday, scrapping plans for a sale of its British banking operations and saying it would instead shrink them by cutting 1,400 jobs, Reuters reported. The Australian bank, which operates 337 Clydesdale and Yorkshire bank branches, looked at a number of options including a sale or expansion but decided neither was realistic given the UK's return to recession last week.

One of the country's largest housing subdivisions has been bought, just over a year after it plunged into receivership, The New Zealand Herald reported. The 250ha Lakes residential community on the western outskirts of Tauranga - which at one time was forecast to have a value of more than $1 billion once completed - has been bought by local developers Carrus Corporation. The price has not been disclosed.

Veteran investor Jack Rodman has had enough. After waiting 11 years for China to sell its rising pile of bad bank loans, he is quitting and going to Spain instead. His pull-out exposes a pressing failing in China's booming financial sector: it does not properly dispose of a growing store of bad loans from banks' profligate lending, keeping risks pent up within the world's second-biggest economy, Reuters reported in an analysis.