Synopsis on the Progress of Structural Reforms in Korea

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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) 

Koreanbanks

Foreign investors

Timing

Amount of Investment

Equity Share (%)

Korea Foreign Exchange Bank

Komerz

July 1998

350 billion won

24.8%;expected to increase to 29.8%

Jeil Bank

New Bridge Capital

Dec. 1998

About $1billion

(uncertain)

51%

(uncertain)

Seoul Bank

HSBC

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