Synopsis on the Progress of Structural Reforms in Korea



Major source of data is a document prepared
by Financial Supervisory Commission
dated May 21, 1999. 

Part I  Financial Restructuring


 Resolution of non-viable banks (as of December 1998)


Capital ratio Requirement

Banks are required to improve capital ratios to


Non-Performing Loans


Institutional remedies

Legal measures which have been taken include:


Foreign Participation (as of May 20) 


Foreign investors


Amount of Investment

Equity Share (%)

Korea Foreign Exchange Bank


July 1998

350 billion won

24.8%;expected to increase to 29.8%

Jeil Bank

New Bridge Capital

Dec. 1998

About $1billion




Seoul Bank


Feb. 1999

About $900 million (uncertain)

70% (uncertain)

Kookmin Bank

Goldman Sacks

April 1999

About $500 million

About 20%


Improving  Efficiency


Part II Corporate Restructuring -for the Top Five


Basic Strategies

  1. Enhancement of management transparency
  2. Elimination of cross guarantees
  3. Improvement of capital structure
  4. Selection of core competence
  5. Strengthening of accountability of major shareholders and management.


Reduction of Debt-Equity Ratio


Reduction of Cross Guarantees


Acquisition of Foreign capital


Disclosure and Transparency


Restructuring Business Scope


Big Deal


Work Out for large-sized corporates other than the Top Five


Rehabilitation of Small and Medium Enterprises


Some Observations