May 05, 1999
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| May 05, 1999 | atimes.com | |
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| The Koreas S. Korea may let chaebol control banks SEOUL - South Korea this year may try again topass a new banking law that includes a provision paving theway for conglomerates to own ontrolling stakes in banks, a high-level finance official said Friday. ''We may bring up a banking law revision at the NationalAssembly session in the fall,'' said Yoo Ji-chang, director ofthe financial policy bureau at the Finance and Economy Ministry. Yoo confirmed the government's plan to sell its stakes inthe Cho Hung (KSE: 00110) and Hanvit (00030) banks, which havea combined value of 11 trillion won (US$9 billion). ''We arenow studying how, when and how many stakes to sell." The government owns 94.75 percent of Hanvit through theinjection of 3.3 trillion won in public funds and 91.07percent of Cho Hung, with 2.1 trillion won to help the two consolidate. ''Sales of the stakes in Hanvit and Cho Hung may be relatedto the revision of a banking law,'' Yoo said. The Finance and Economy Ministry proposed last year torevamp the law to allow majority shareholding in major banksby conglomerates, or chaebol, this year. It shelved the idea early this year, due to oppositionwithin the government, which said it was premature forchaebol to own banks. Some say that banks can be run more responsibly under amajority shareholder, while skeptics fear that chaebol, whichare the only companies financially capable of buying majoritystakes in banks, may run them as their private piggybanks. A revised law would allow the Hyundai Group to own amajority stake in Cho Hung, which would increase in size nextmonth through its merger with the Chungbuk and Kangwon Banks. Equity ownership in regional banks is less restrictive. Meanwhile, Yoo said there were no signs of overheating onthe local stock market. ''There is no reason for the stock market to go bad. Oureconomic conditions provide the background for currentstock-market rally,'' he said. ''The government cannot and will not interfere directly inthe stock market. Supervising the possible illegal operationof stock funds managed by institutions affiliated to chaebolsis part of our ordinary duties." The Korean bourse dropped nearly 40 points Thursday on thebrink of crossing the 800 mark, amid rumours of governmentmeasures to cool the steaming market. Yoo said that current growth rates, prices and liquiditywere adequate, hinting at no further cuts in interest rates. (Asia Pulse/Yonhap) | |||||||||
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