South Korea’s financial authorities will take disciplinary actions against banks for their negligence to be on the lookout for the default of conglomerates.

Banks to face penalties over negligent lookout for default of conglomerates

2013.10.30 11:28:58

South Korea’s financial authorities will take disciplinary actions against banks for their negligence to be on the lookout for the default of conglomerates. The authorities will also increase the number of conglomerates who commit to improving financial structure to prevent another collapse of conglomerate as Tong Yang Group did. After Tong Yang Group’s subsidiaries filed for court receivership, the Financial Supervisory Service (FSS) decided to conduct a thorough evaluation of main creditor banks during its bank assessment to strengthen accountability of financial firms, said sources in the financial sector Wednesday. The FSS intends to enable creditor banks to request companies to hand over information on their expansion plans such as inter-subsidiary deals or merger and acquisitions (M&A) or changes in corporate governance and concentrate the information on main creditor banks.
The decision is part of an effort to check main creditor banks, as some banks were found to have evaded their duty to monitor corporations’ financial status and instead focused only on securing collaterals for lending.
The new evaluation targets main creditors of 30 major conglomerates, including Korea Development Bank (KDB), Woori Bank, Shinhan Bank and Hana Bank.
More companies will be required to make commitment to enhance their financial structures.
As of now, STX Group, Kumho Asiana Group, Hanjin Shipping Group, Dongbu Group, Taihan Electric Wire and Sungdong Shipbuilding & Marine Engineering signed agreements with their creditors to improve financial structures.
Meanwhile, the FSS examined the financial health of Hyundai Group, Doosan Group, Hanjin Shipping Group and Dongbu Group, who are suspected of being mired in cash crunch, and concluded they are in good shape.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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