Alarm bells are sounding over the collapse in consumption, according to official figures that show high-income earners tightening their purse strings, The Korea Times reported. Sales at discount chains like E-Mart, Lotte Mart and Home plus plunged 7.4 percent year-on-year in June, the sharpest drop in 16 months, after being hit with a double-whammy of less spending and business-hour restrictions imposed by the government. It was the third consecutive month of revenue decline for the retailers, following a 5.7 percent drop in May and a 2.4 percent fall in April.

Creditors of Ssangyong Engineering & Construction (E&C) have decided to relinquish a controlling stake in the company by means of a private contract after open bids failed to achieve this end, The Korea Times reported. A German engineering firm, which took part in three previous bids, has emerged as the most likely to acquire one of Korea’s largest builders, according to industry officials Monday.

Woori Finance Holdings Co. and Hana Financial Group Inc. are among the bidders that have submitted initial offers to buy the troubled savings banks put up for sale by the government, people familiar with the matter said Friday, The Wall Street Journal reported. South Korea's laws stipulate that the government can intervene in a faltering financial firm, and the country's financial regulator put the four second-tier financial firms up for sale when it suspended their operations last month for six months due to their weak financial standing.

As Korea finds itself dragged into a disastrous vortex of faltering exports, collapsed consumer spending and spiraling debt, government officials appear at a loss on how to prevent the country’s fragile recovery from derailing, The Korea Times reported. But they could do much worse than starting from eliminating corruption and cronyism from the bureaucratic veins, according to a number of economists here. The subduing economy pretty much ensures that President Lee Myung-bak is going out on a whimper.

Things are going from bad to worse for large discount store chains these days as consumers have further tightened their wallets amid renewed concerns over the worldwide recession triggered by the eurozone debt crisis, The Korea Times reported. E-Mart, Home Plus, Lotte Mart and other discount store operators are also facing tightening regulations, chipping away at their bottom line, as the government and political parties target them to garner support from those running small mom-and-pop shops.

Loan default rates at major credit card firms have surpassed the 2-percent mark for the first time in three years, prompting concerns that financial soundness in the card sector is deteriorating, The Korea Times reported. This is the result of the financial regulator’s measures to curb commercial lenders from extending credit to households, which has forced many low-income earners to resort to secondary banking institutions, such as plastic issuers and savings banks.

Chinese shipper Sinotrans Ltd. said Wednesday that the board of Grandstar Cargo International Airlines, a freight forwarder jointly owned by a unit of Sinotrans and Korean Air Lines Co., has approved plans to liquidate the carrier amid mounting losses and lackluster prospects in the air-freight market, The Wall Street Journal reported. Sinotrans said Grandstar Airlines, which has already suspended flight operations, had a net loss of 340.1 million yuan dollars ($53.8 million) in 2011, widening from losses of 20.7 million yuan in 2010 and 94.3 million yuan in 2009.

A group of Elpida Memory bondholders opposes Micron Technology's offer to buy the bankrupt Japanese chipmaker and has reached out to South Korea's SK hynix and U.S.-based GlobalFoundries to ready a potential alternative plan, a source with direct knowledge of the matter said, Reuters reported. SK hynix, which had dropped out during the second and final round of bidding for Elpida, is interested in the memory chipmaker's Taipei operations, while GlobalFoundries is interested in its Hiroshima operations, said the source, who asked not to be identified.

The Korea Housing Finance Corporation (HF) confirmed that more and more seniors are turning to reverse mortgages, an arrangement in which a homeowner borrows against the equity in his or her home and receives monthly payments from the lender, The Korea Times reported. It could be argued that reverse mortgages are a financial tool tailored made for Korea, which struggles to cope with a prolonged housing market slump, decaying employment situations, spiraling family debt and stagnant income. This has resulted in millions of over-50 Koreans marching blindly into retirement poverty.

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.