See all those languages up there? We translate Global Voices stories to make the world's citizen media available to everyone.

Learn more about Lingua Translation  »

South Korea: Battling Against Foreign Finance's Encroachment

Korea Exchange Bank (KEB) employees and civil rights activists went out to the street of capital Seoul together on February 28, 2011, to protest against foreign finance's encroachment on South Korean financial turf. Korean net users are supporting their move, retweeting and spreading KEB employees’ postings.

Photo of KEB protest in Seoul. Image by Twitpic user @Barunsori6.

Photo of KEB protest in Seoul. Image by Twitpic user @Barunsori6.

On November 22, 2010, South Korea's Hana financial group sealed a bid for United States buyout firm Lone Star Funds to takeover KEB in February 2011, but public dissent against the move has continuously escalated. After small shareholders of KEB filed a lawsuit against the decision on March 2, 2011, the deal's execution hit an impasse. Experts analyzed that, even from a capitalist angle, Hana's takeover can only be a hollow victory.

Unnatural Buyout

At first glance, it sounds like a natural buyout between local banks, but the protesters tell another version of the story. US fund Lone Star is Hana's major shareholder, and Hana's past record of aggressive and even destructive buyouts suggest that this is no ordinary deal.

Due to over-complexity surrounding the issue and presumed pressure from Korean financial or political powers, the country's mainstream media have kept their mouths shut, leaving no choice to KEB employees but to voice concerns themselves.

Luckily, their protest has been amplified by Twitter, Daum Agora (South Korea's most visited public forum) and a few online new media sites. Currently one of most circulated tweets is [ko] ‘Lone Star's record’ which reveals the speculative nature of the US company. It asserts that the net profit of Lone Star is three times the amount of investment they have made.

Media Blackout

Several thousand people participated in the Seoul protest event on February 28, 2011, but no report of it appeared in any of the major newspapers. South Korean influential tweep @Barunsori6 posted a photo of the protest (above) and photo journalist @suncho21 tweeted and retweeted several tweeps’ opinions and a photo taken by @kebforever.

RT @parksy1004: 힘내세요.방송과 신문에 절대 안나오는 사진, 28일 5500백명이나 모였는데.RT @kebforever[…] http://yfrog.com/h3ieyxlj

RT@parksy1004: Take courage. This photo had never appeared on (major) broadcasts and newspapers. About 5,500 people gathered on February 28 (to protest). RT @kebforever: […] http://yfrog.com/h3ieyxlj

On Daum Agora site, net user ID: ClearGlass posted a video of a solo protest carried out by a 26-year-old female employee. Over 500 comments were added below the post to a sign of support.

젊은 여직원(26세)이 사랑하는 회사와 정의를 위해 피켓을 들고 거리로 나섰습니다. 한번도 경험해 보지 못했고, 누군가 앞에 서보지도 않았습니다. 누가 시킨일도 아니고, 그렇게 했을 때 나에게 돌아올 불이익도 걱정을 했습니다. 하지만 그냥 이대로 앉아 일할 수는 없었습니다. 매일 아침 두시간 일찍 일어난다고 합니다. 누구보다 먼저 회사에 출근합니다. 그리고 피켓을 만들고, 그 피켓을 들고 명동거리 한복판으로 갑니다. […] 처음에는 너무 부끄러웠답니다. 사람들의 차가운 시선이 창피했답니다. 그런데 그녀는 지금 당당히 말합니다. […]하나금융의 빚더미 인수시도와 건실한 외환은행을 지키기 위한 외환은행 직원의 1인 시위는 오늘도 계속되고 있습니다.

A young female employee of KEB (aged 26) went out to the street to defend her beloved company and justice. She had never experienced a protest before and had never stood in front of the public. No one had told her to protest. She had worried about the disadvantages that her action might bring. But she could not just sit and work as if everything was normal. Everyday, she wakes up two hours earlier than usual and arrives at the company before anyone else does. Then, she makes placards and carries them into the heart of Myungdong street. […] She was embarrassed at first and ashamed of herself when people threw cold glances at her. But now she speaks boldly. […] This KEB employee's solo protest continues today to defend the flourishing bank against a debt-ridden buyout by Hana.

Among the very few Korean media who have published articles on this issue, the Wiki Tree (South Korean citizen media site) posted an article [ko] written by KEB employee. It received over 300 retweets.

하나금융은 한국투자금융이라는 단자회사를 모태로 부실화된 금융회사를 끌어 모아 거대한 종합금융그룹으로 성장했다. 한국투자금융은 담보용 백지어음을 미리 받아두고 부실 징후만 보이면 재빨리 채권을 회수하는 매몰찬 영업방식으로 악명이 높았는데 은행 전환 이후에도 이러한 기조를 유지했다. 기존 은행들이 기업대출 부실에 제대로 대처하지 못하고 쓰러지자 인수를 통해 몸집을 키웠다.

Hana Financial has grown into a huge financial group by inducing insolvent financial companies together under its mother company, Korea Investment Finance Corporation (KIFC), which is a short-term investment finance company. KIFC was notorious for its cruel management style. It used to accept blank bills from companies in advance as securities and as soon as it detected a sign of insolvency in the company, it would quickly retrieve the bonds. KIFC held on to this principle even after they themselves had turned into a bank. When other banks collapsed by mishandling corporate financial distress, Hana scaled up by corporate mergers.

[…] [대투증권과 대투운용에 투입된 공적자금 이야기 부분] 천문학적인 규모의 세금을 쏟아부어 살려낸 회사를 10분의 1 정도의 가격에 넘긴 것을 두고 그때도 헐값매각이라는 논란이 끊이지 않았다.[…]하나금융지주의 외국인 지분비율은 80 %에 이른다. 조금 심하게 말하면 알짜배기 금융 계열사들을 모아 더 많은 이익을 만들고 그 이익을 외국인 투자자들에게 갖다 바치는 꼴이 됐다는 이야기다. 이 이상한 시스템은 더 많은 배당을 만들기 위해 건물을 내다 팔거나 자본금을 빼내가기도 하고 심지어 자회사를 내다 팔기도 한다. 더 큰 문제는 누구도 이 시스템에 저항을 할 수 없게 됐다는데 있다.

[regarding huge amount of public funds spent on the Daetoo Securities and Daetoo Financial Planner, which were eventually sold to Hana] Hana had bought these at cheap prices, little more than one tenth of the original price. These companies were the ones the government had resuscitated by injecting an astronomical amount of taxpayers’ money. And this ‘giveaway’ sell-off created incessant controversies. […] Foreigners’ shares in Hana Financial make up 80 percent. With a little bit of exaggeration, it can be said that Hana is squeezing profits out a group of healthy financial companies only to hand these over to foreign investors. This weird system has forced people to sell their buildings, withdraw their capitals, and even to sell off their subsidiary firms in order to increase their dividends. Whats worse? This system has become absolute, which no one dares to resist.

조직 통폐합 과정에서 혹독한 구조조정이 있었다. 또한 자회사의 매각 등 돈이 되는 자산들의 처분이 이어졌다. 우리의 혈세인 공적자금이 사라진 것이다. 금융지주회사는 금융산업의 대형화와 계열화를 통해 경쟁력을 높이고 투명성을 확보한다는 명분으로 2000년부터 허용됐다. 우리금융지주회사와 신한금융지주회사 등이 잇따라 인수합병과 계열사들끼리 지분 맞교환을 통해 금융지주회사로 전환하고 몸집을 불리고 있다.[…]문제는 금융지주회사가 그 도입 취지와는 달리 주주들의 단기 이익을 극대화 하는 방향으로 흐를 가능성 때문이다. […]우리들에게서 나가는 이자가 그들에게는 바로 이익이 되는 것이다. […]결국 이는 국부유출로 이어지게 된다.

During the organization merger and abolition process, pitiless business reconstruction took place. The sellouts of subsidiary companies and assets that are worth quite a lot have continued. In 2000, the South Korean government approved the financial holding company (system) for a good cause – to boost competitiveness and secure transparency in the Korean financial industry through conglomeration and integration processes. […] Problems arose when the financial holding company, against its purpose, focused mainly on maximizing the short-run profits of shareholders, which is a highly probable scenario.[…] What we pay as interest, becomes their profits. […] It leads to a drain on our national wealth.

Hemorrhage of National Wealth

On Daum Agora site, Net user ID: LigerUppercut wrote [ko] what the drain of national wealth actually means to ordinary citizens.

일반인의 시각에서 외환은행 매각의 가장 큰 아쉬움은 누가 뭐라해도 론스타에 지불해야 할 약 5조3천억원규모의 매입대금 중 이익금으로 추정되는 약 4조원에 달하는 어마어마한 자금의해외유출일 것이다. […] 4조원의자금, 2011년 우리나라 전체 예산의 약1.3%에 달하며, 2011년 우리나라 보건복지예산의 약4.6%에 달한다. 예산부족으로 인하여 예산편성되지못한 사회복지분야의 결식아동, 노인문제, 급식비문제등을 본다면 외환은행 노조측의 주장인 국부유출이라는 부분에 대해 공감이 간다.

What normal people will feel is most regrettable about the KEB takeover deal is the 4 trillion Korean won (USD 3.6 billion) hemorrhage of national wealth, which will be sent to a foreign company as a result. From the 5.3 trillion won (USD 4.8 billion) we will be paying to Lone Star for the buyout, the profits it will gain will amount to 4 trillion won. The 4 trillion won is equivalent to 1.3 percent of our national budget in 2011 and 4.6 percent of our welfare and health budget. Think of a list of things that [the government] could not include in the budget, such as money we could spend on helping hungry children, senior citizens and on providing school meals. It is hard not to agree with KEB employees’ argument that it is a huge drainage of the national wealth.

For Hana, this may also be a dangerous deal which will harm both sides. South Korean progressive news website, Pressian, predicted the deal could turn into a ‘winner's curse’ [ko] (direct translation). A tweet added under the article by @seulah_kim, read:

최근의 글로벌 금융위기 이후 전세계 유수 은행들은 내부 리스크관리와 내실다지기에 집중하고 있는데, 우리나라는 아직도 부실한 하나금융이 해외 투기자본 빚내서 끌어모아 덩치 불리기라니요.. 참 한심할 따름입니다.

After the (2008-09) global financial crisis, prestigious banks worldwide have started focusing on internal risk management and insuring sustainability. But what we do is (let) insolvent Hana financial group to take in speculative foreign investment money to scale itself up. It is so deplorable.

To economic libertarians, this uphill battle of KEB employees, citizen groups and small shareholders against financial power may appear meaningless. Strangely, Hana's leadership, which acts like a globalization advocate, once harshly criticized [ko] Lone Star and other foreign financial companies, describing them as looters when bidding against them in other deals.

It is Hana's turn to choose either globalization or patriotism.

3 comments

  • […] Agreement to Purchase KEB is Still in Doubt It is pretty strange idiotic that we are still talking about this. The FSS is still debating whether or not the original purchase of KEB by Lone Star, a US-based […]

  • As a Korean-American with first-hand knowledge of the situation surrounding KEB at the time, it is embarrassing in some sense that this remains a topic. The link above gives only a superficial explanation of the situation. This debacle has been the topic of a few other posts on the Seoul Gyopo Guide.
    When the purchase of KEB by Hana was agreed, here was the post: http://www.seoulgyopoguide.com/?p=429
    When the Korean Supreme Court rejected one of the bogus claims made to block the original purchase of KEB by Lone Star, here was the post:
    http://www.seoulgyopoguide.com/?p=39

    Unfortunately, the article above is expressing the views of one side with no consideration to the near-death situation that KEB faced at that time, and no description of the multiple types of Korean entities that could have either a)blocked the transaction in advance, or b)bought KEB at that time. If there is a retort to either of these two points anywhere in print, please make that the topic of the next article, and the Seoul Gyopo Guide would be happy to respond in kind.

    Before Korean readers try to call me a foreigner that is poisoning Korea or trying to put Korea in the worst possible light, please read the Welcome message at the Seoul Gyopo Guide. It is here:
    http://www.seoulgyopoguide.com/?page_id=864

    Regards,
    thelostseoul
    http://www.seoulgyopoguide.com

  • The “editor” is flawed: I was making additional points not in the pingback. The moderator which is obviously a bot has done a very poor job, fyi.

    If there are disagreements to the pingback above, please feel free to post at http://www.seoulgyopoguide.com. As long as there are responses that follow the Guidelines mentioned below, they will be posted.

    Regards
    thelostseoul
    sole author of http://www.seoulgyopoguide.com

Join the conversation

Authors, please log in »

Guidelines

  • All comments are reviewed by a moderator. Do not submit your comment more than once or it may be identified as spam.
  • Please treat others with respect. Comments containing hate speech, obscenity, and personal attacks will not be approved.

Receive great stories from around the world directly in your inbox.

Sign up to receive the best of Global Voices
Email Frequency



No thanks, show me the site