South Korea

The uncertain global economy isn’t the only hurdle for SsangYong Motor to clear this year. South Korean politicians are putting up another, The Wall Street Journal Korea Real Time blog reported. Some lawmakers from opposition parties want the National Assembly to look into a possible accounting fraud by Shanghai Automotive Industry Corp., or SAIC, the previous owner of Ssangyong, which is South Korea’s fourth-biggest car maker by output.

Applications for reverse mortgages, which are typically taken out by elderly or retired homeowners who borrow money in the form of monthly payments against the equity in their homes, are surging to the highest in six years. Loans backed by state- run financing firm Korea Housing Finance Corp. jumped 71 percent in 2012 as retirees like Kim sought a steady income in a nation wracked by personal debt, falling home values and a rapidly aging population, Bloomberg reported.

Daewoo Electronics Corp. is finally getting a new owner – more than a decade after the collapse of its mother conglomerate that was the most storied business failure in the country’s history, The Wall Street Journal Korea Real Time blog reported. Dongbu Group, considered a mid-sized chaebol because it operates in seven businesses and has about 40,000 employees, picked up a 51% stake in Daewoo Electronics for 276 billion won, or about $256 million. It beat out another Korean firm, Samla Midas Group, and Sweden’s Electrolux AB for the stake.

Royal Bank of Scotland Group Plc won dismissal of a lawsuit filed by Seoul-based Woori Bank over losses from investments in collateralized debt obligations (CDOs) tied to the housing market, Bloomberg News reported yesterday. A federal judge in New York ruled yesterday that the South Korean lender failed to present a strong enough case against RBS. Woori Bank had alleged that it was duped into investing $80 million in CDOs that were exposed to risk from the subprime housing market, according to the order filed today by U.S. District Judge Harold Baer.

Korea’s total debt, combining those in private and public sectors, has reached 3 quadrillion won (about $2.75 trillion) in the second quarter, fanning worries that the country is increasingly exposed to a credit crisis, The Korea Times reported. According to the Bank of Korea (BOK) and the financial industry, the nation’s total debt stood at 2.96 quadrillion won in June, accounting for 233.8 percent of its nominal gross domestic product (GDP). The combined debt increased by 103 trillion won, or 3.6 percent for six months since December.

Korea's financial regulator said Thursday it will step up moves to revamp the procedures for the corporate restructuring system in a bid to prevent moral hazard often incurred by company owners, The Korea Times reported. Under the envisioned plan, the regulator will strengthen creditors' rights by giving them more power to engage in the process of court receivership and debt workouts, according to the Financial Services Commission (FSC).

Alarming data at a number of savings banks suggest that the country has yet to entirely deal with its secondary banking crisis. But after suspending the businesses of 20 savings banks in the past two years over concerns of financial implosion, regulators appear to be backtracking from their commitment to purge the sector as Koreans prepare to elect a new president in December, The Korea Times reported.

The construction affiliate of the Woongjin Group, a mid-tier conglomerate, was declared bankrupt Wednesday and filed an application to undergo a court-managed workout program, The Korea Times reported. The move is expected to strike a severe blow to the group, which is already suffering from a liquidity shortage. Woongjin Holdings also filed for court receivership with the Seoul Central District Court the same day, saying it was the only option to save the entire group.

The financial authorities said Thursday that they have decided to strengthen the qualification of major shareholders and executives at savings banks to the level similar to those applied to commercial banks, The Korea Times reported. The move came as part of efforts to help ensure transparency in their management after the savings bank fiasco in which more than 20 savings banks had their business operations suspended due to poor financial health in the past two years.

South Korea's government announced a $5.9 trillion won (about $5.23 billion) stimulus package for the economy Monday to combat stagnant growth. The program, formulated to inject 4.6 trillion won during the remaining months of this year and 1.3 trillion won next year, is designed around tax breaks on personal income and purchases of homes, automobiles and large electronics products such as televisions and refrigerators, The Korea Times reported.