S. Korea's top priority is to save jobs, help smaller businesses: minister SEOUL, Dec. 19 (Yonhap) -- The government will place top priority on helping small and medium-sized enterprises next year in a bid to prevent further job losses amid worsening economic conditions, a top policymaker said Friday. "The first half of next year will be the worst period (for the South Korean economy)," Finance Minister Kang Man-soo told a weekly crisis management meeting. "We have paved the way for getting over the ongoing crisis but small and medium-sized companies will have the most difficult time."South Korea's jobless rate stood at 3.1 percent in November with job creation falling to a 5-year low as companies refrained from hiring amid a bleak economic outlook. The economy generated 78,000 new jobs last month, far less than the government target of 200,000.

Kang said that most job losses occurred among those in their 20s and 30s, adding that behind the slumping recruitment market are smaller companies struggling from ongoing economic woes. In a related comment, Kang called for the Ministry of Land, Transport and Maritime Affairs to review its anti-speculation measures "from scratch," expressing concerns that "asset deflation" could derail government efforts to prevent further job losses.


N. Korea has ballistic missiles reaching U.S. mainland: U.S. admiral By Hwang Doo-hyongWASHINGTON, Dec. 18 (Yonhap) -- North Korea possesses long-range ballistic missiles than can reach the mainland United States as well as Hawaii, Admiral Timothy Keating of the U.S. Pacific Command said Thursday. "North Korea does have intercontinental ballistic missiles that can reach the United States, including Hawaii and territories of the Untied States in our responsibility in the Pacific," Keating said in a news conference at the National Press Building here. The admiral, however, said that his command is "more than prepared to address this issue should it develop."North Korea test-fired a long-range missile in 2006 for the second time after a similar one in 1998 amid conflicting reports about the success of the tests. The ballistic missile launched in July 2006 flew less than one minute before diving into the East Sea that adjoins Japan. Some experts, however, say the flight time is enough to prove the North's ballistic missile capability, while others say differently. In 1998, a missile from North Korea flew over Japan and reached seas off Alaska. Shocked by the North's ballistic missile capability, then-U.S. Secretary of State Madeleine Albright visited Pyongyang in late 2000 to persuade the North to abandon its strategic weapons programs. Then-President Bill Clinton agreed to visit the North Korean capital to conclude talks on weapons of mass destruction in his waning months, but never made the trip, citing a lack of time. The agreement was shelved by Clinton's successor, George W. Bush, who refused to deal directly with North Korea, which he designated as part of an axis of evil. Keating would not say if Pyongyang has developed a nuclear warhead small enough to be loaded on a long-range missile or any other delivery system. "I am not going to give you a yes or no answer," he said, but added that the U.S. is prepared to deal with any nuclear threat "should that situation present itself."Theories vary on the North's nuclear capabilities. U.S. intelligence reports say that North Korea has several nuclear warheads, although the U.S. government does not officially acknowledge the North as a nuclear weapons state. On the health of North Korean leader Kim Jong-il, Keating said he does not know specifics, but added the reclusive leader "is alive and he is in control of the North Korean government."Despite rumors of Kim Jong-il's health failure and the escalating tension on the Korean Peninsula due to chilling inter-Korean ties, the U.S. Pacific Command has not changed its defense posture, the admiral said. Kim Jong-il is said to have suffered a stroke and undergone brain surgery recently. North Korean media, however, recently launched a campaign to release photos of Kim making public appearances after his absence from public view over the summer triggered rumors of illness. Based on the photos of Kim, South Korean experts and intelligence sources say he has some problems with his left hand, which is mostly covered by gloves, apparently from the aftermath of the stroke.



S. Korea plotted against N.K. leader: N.K. spokesman SEOUL, Dec. 18 (Yonhap) -- North Korea said Thursday that it has arrested a person who tried to conduct a terrorist mission against its leader, Kim Jong-il, under orders from the South Korean intelligence agency. In a statement, a spokesman for North Korea's State Security Ministry said that recently, a person with the surname Ri was arrested while carrying out a "terrorist mission given by a south Korean puppet intelligence-gathering organization to do harm to the safety of the top leader of the DPRK." DPRK is the abbreviation for the North's official name, the Democratic People's Republic of Korea. The statement carried by the (North) Korean Central News Agency added that Ri crossed the inter-Korean border in violation of the law early this year, and was intercepted by a South Korean intelligence agent surnamed Hwang. The South's National Intelligence Service sent him back to the North after training him to gather information about the course and period of Kim Jong-il's field guidance visits, it said. "The organization also sent him speech and acoustic sensing and pursuit devices for tracking the movement of the top leader," said the statement. The spokesman gave the Lee Myung-bak government's "anti-North Korean moves" that have reached "an extremely reckless and dangerous phase" as its reason for issuing the statement. The statement came amid completely frozen inter-Korean relations following the launch of the conservative government in the South and the death of a South Korean tourist shot by North Korean soldiers near the North's Mount Kumgang in July. The North recently suspended inter-Korean tours to its attractions and expelled hundreds of South Koreans in the inter-Korean industrial complex in the North Korean border town of Kaesong, citing the Lee government's "tough" stance against it.


(2nd LD) N. Korean military official says South-North relations in 'serious' state By Kim HyunSEOUL, Dec. 18 (Yonhap) -- A senior North Korean military official said Thursday that the chill in inter-Korean relations is now "serious" and urged Seoul to withdraw its hard-line policy toward Pyongyang so as not to exacerbate the situation, a Seoul spokesman said. Lt. Gen. Kim Yong-chol, head of the policy planning office of the North's National Defense Commission, delivered the latest message from Pyongyang as he inspected the inter-Korean industrial complex in the North's border town of Kaesong in a rare trip. "North-South relations are frozen at this moment. It's a serious situation," the North Korean official was quoted by the Unification Ministry spokesman, Kim Ho-nyoun, as telling South Korean businesspeople in Kaesong. North Korea evicted hundreds of South Koreans at the Kaesong complex and cut border traffic as of Dec. 1, following months of strained relations. It also suspended South Korean tours to its mountain resort. The two-day inspection sparked speculation that Pyongyang may be considering further sanctions on Kaesong. The military official made a similar survey of Kaesong on Nov. 6, about a week before Pyongyang announced the Dec. 1 sanction. The North warned it may further curtail business exchanges should Seoul remain tough. South Korean President Lee Myung-bak has adopted a tougher policy toward the North than his liberal predecessors, demanding concrete denuclearization by Pyongyang and more reciprocity for Seoul's aid. "If there's no change of attitude by the South, current measures will not be lifted," the North Korean official said. Seoul is trying to quell speculation on fresh sanctions. The ministry spokesman said that during his two-day inspection, the military official mostly talked about South Korean businesses, such as output and wages for North Korean employees in Kaesong. "The atmosphere was better, compared to the previous visit," the spokesman said. "Our assumption is that he was visiting to see how the situation has changed after the measure was taken and to make plans for the next year, rather than to prepare for new sanctions."Some experts, however, sensed a tougher message. Even though the military official gave no direct warning of new sanctions, the inspection itself carries the hint that Pyongyang is willing to further curtail operations in Kaesong, said Kim Keun-sik, a North Korea specialist at Seoul's Kyungnam University. "Would he need to come down just to survey?" he asked. "The fact that he traveled from Pyongyang means that with or without additional measures, the North has moved from the Dec. 1 sanction toward the next stage ... The message is, 'Withdraw the tough policy, or we will do more.'"The Kaesong industrial complex opened in 2004, joining South Korean capital and technology with North Korean labor to produce shoes, clothes, kitchenware and watches. There are currently 88 South Korean companies employing around 36,000 North Koreans in Kaesong. A North Korean worker is paid US$60-$80 a month on average. Experts generally agree North Korea will not go to the extreme of shutting down the joint complex, which would deter foreign investors and dramatically heighten tension in the border region.



(2nd LD) S. Korea to set up 20-tln-won fund to boost bank capital By Kim Soo-yeonSEOUL, Dec. 18 (Yonhap) -- South Korea's financial watchdog said Thursday it plans to set up a 20 trillion won (US$15.4 billion) fund aimed at helping local banks raise the capital base to improve their financial health. The Financial Services Commission (FSC) said it plans to create a fund in January that will be used to buy preferred stocks, subordinated bonds and hybrid debt sold by lenders. The fund will be operated until the end of 2009. "The creation of the fund will help local banks beef up their capacity to absorb possible losses in the face of a prolonged economic downturn and industrial revamp," the FSC said in a policy report to President Lee Myung-bak. According to the FSC, the Bank of Korea (BOK), the country's central bank, would contribute 10 trillion won to the envisioned fund if its board approves the plan. Institutional and individual investors would put 8 trillion won into the fund, with state-run Korea Development Bank (KDB) chipping in 2 trillion won. The move comes as South Korean lenders are struggling to bolster their falling capital adequacy ratio, a key barometer of financial soundness, as the slowing economy and a credit squeeze are increasing the amount of bad loans. The average capital adequacy ratio of 18 commercial and state banks came in at 10.79 percent as of the end of September, the lowest in more than seven years and down from 11.36 percent three months earlier. The ratio measures the percentage of a bank's capital to its risk-weighted credit. Local banks are making their own efforts to shore up the ratio mainly by selling subordinated bonds. In selling such debts, lenders record the proceeds from the debt offering as supplementary capital, which helps raise their capital adequacy ratio. "By improving banks' financial heath, the fund will help local lenders increase their capacity to support smaller firms or exporters," the FSC said. In return for the capital injections, banks will be required to beef up their own self-help efforts by cutting costs and increasing support to smaller firms. They should also refrain from using the money to increase their assets through takeovers or other means, it added. The FSC also added that the country's state-run Korea Housing Finance Corp. plans to buy mortgage loans worth 7 trillion won, while the state-owned debt clearer Korea Asset Management Corp. will purchase 3 trillion won in bad debts from banks in a move to help clean banks' balance sheets. "On the back of the fund, local banks could have more room to support the real economy even if bad debt increases," said Shin Dong-kyu, chairman of the Korea Federation of Banks (KFB), an association to promote the interests of the banking industry. "But it should be noted that recapitalization through the fund is to secure a back-up system in the face of a possible emergency. It does not mean that lenders' business conditions have deteriorated," he emphasized. The watchdog said the government plans to increase the capital base of state-run lenders KDB and the Industrial Bank of Korea by 2.3 trillion won to boost their lending capacity. The measure would expand the two lenders' total corporate lending by 14 trillion won to 68 trillion won, the FSC added. The government also plans to expand its debt guarantee capacity for state-owned credit guarantee agencies by 11.7 trillion won by boosting their capital base. Amid the slowing economy, local banks and companies have been suffering from cash shortages as higher credit risks discourage banks from lending to each other or to smaller firms and households, tightening a credit squeeze.



Seoul stocks open higher on electronics gains SEOUL, Dec. 19 (Yonhap) -- South Korean shares started higher Friday, led by surging electronics shares, analysts said. The benchmark Korea Composite Stock Price Index (KOSPI) added 6.60 points, or 0.56 percent, to 1,182.51 in the first 15 minutes of trading. U.S. shares tumbled Thursday as dismal corporate outlooks and slumping oil prices worsened market jitters. The Dow Jones industrial average shed 2.49 percent and the tech-heavy Nasdaq fell 1.71 percent. The local currency was trading at 1,306 to the U.S. dollar as of 9:15 a.m., down 14 won from Thursday's close.



S. Korea establishes melamine content standard for food SEOUL, Dec. 19 (Yonhap) -- South Korea has established a set standards limiting the amount of melamine found in all food products to better protect public health, the government said Friday. The Korea Food and Drug Administration (KFDA) said it will not permit any traces of the chemical, linked to kidney complications, in milk and food products given to babies and toddlers while allowing up to 2.5 parts per million (ppm) in other types of food. Melamine, a nitrogen-based industrial chemical that artificially increases protein content in dairy products, caused an uproar in China earlier in the year after traces of the toxin were discovered in baby milk formula, leading to the deaths of several infants and the illness of thousands more. South Korean authorities have found melamine traces in imported powdered milk and eggs, biscuit ingredients and animal feed. It said the standard set by health experts and government officials will undergo due administrative process in the coming months before becoming the official standard around March.


Banks Reeling From Snowballing Bad Loans
By Kim Jae-kyoungStaff ReporterWith the economic downturn deepening, local banks are saddled with snowballing bad loans.According to industry sources, substandard loans for seven commercial banks ― Kookmin, Woori, Shinhan, Hana, Korea Exchange Bank (KEB), SC First and Citibank Korea ― amounted to 6.4 trillion won in September, up 1.13 trillion won from a quarter ago.Substandard loans refer to loans exposed to losses and uncollectible loans. Banks have to set aside reserves for possible losses with such loans.By bank, substandard loans at Kookmin Bank, the nation's largest lender by assets, came to 1.63 trillion won in September, up 320 billion won from a quarter before.Hana Bank also saw substandard loans jump by 244.4 billion won to 1.02 trillion won, while comparable loans at Woori and Shinhan increased by 209.6 billion won and 188.2 billion won, respectively, to 1.3 trillion won and 1.33 trillion won.The bad loans at KEB rose by 114.3 billion won to 511.3 billion won, SC First by 25.4 billion won to 343.1 billion won and Citibank Korea by 35.9 billion won to 253.5 billion won.Despite rising problem loans, the average substandard loan ratio for the commercial banks remains below 1 percent. The ratio stood at 0.82 percent in September, up from 0.71 percent a quarter ago.However, the problem is that once the economic slump deepens further, chances are that a large number of normal loans at these banks will turn sour, putting further constraints on their balance sheets.``Since local lenders have cleared themselves of a huge amount of bad debts with their profits over the past few years, they have the capability of withstanding some losses,'' a local bank official said.``However, banks can face real challenges if some large enterprises go bankrupt in the wake of the prolonged economic slump,'' he added.The government's move to set up a bank recapitalization fund came as a preliminary step to prevent banks' financial soundness from deteriorating further so that they can lend to struggling enterprises.
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· BOK officials attributed the shortfall seasonal factors such as brisk demand for working capital and a rise in loans from financial institutions and bond issues. (출처: The Korea Herald)
한국은행 관계자는 자금 적자를 운영자금의 수요 급증과 금융기관 대출과 채권 발행 증가 등과 같은 계절적 요인으로 돌렸다.
· Thanks to the improved health of household loans, including credit-card debt, we managed to book fewer loan-loss provisions, leading to the growth in net profit, the bank said in an e-mailed statement. (출처: The Korea Herald)
제일은행 관계자는 “신용카드 채권 등 가계여신의 건전성 제고에 따른 대출채권 대손충당금 전입액 감소 등으로 실적이 좋아졌다”고 설명했다.
· The three Korean policy banks will have increased funding needs this year and plan to tap the offshore bond and loan markets, according to Basis Point, a loan pricing company. (출처: The Korea Herald)
전문 컨설팅업체인 베이시스포인트는 국내 3대 국책은행들이 올해 자금조달을 늘리기 위해 역외 채권과 대출 시장에 의존할 거라고 말했다.
· Last year, it raised around $500 million from the bond market and $200 million in the loan market. (출처: The Korea Herald)
지난해 기업은행은 채권시장과 대출시장에서 각각 5억달러와 2억달러를 조달한 바 있다.
· Nonperforming loans made up 4.03 percent of Kookmin`s overall lending at the end of the quarter. (출처: The Korea Herald)
1분기 말 국민은행의 부실채권은 전체 대출 중 4.03%를 차지했다.
· Local lenders largely scaled down the proportion of bad debts in its total loans this year, improving its financial stability, the top financial regulator said yesterday. (출처: The Korea Herald)
올해 국내 시중은행들은 대부분 재무 안정성 개선을 위해 전체 대출에서 차지하는 부실채권의 비중을 축소했다고 금융 규제당국은 어제 말했다.
· In 2003, Kookmin posted a net loss of 753.3 billion won after increasing provisions against bad loans from households and credit card users. (출처: The Korea Herald)
2003년 국민은행은 가계대출과 신용카드 연체자 부실채권에 대한 대손충당금 적립액 증가로 인해 7533억원의 적자를 기록했다.
· Replacing them were mortgages and other assets such as auto loans, said the global credit-rating agency. (출처: The Korea Herald)
신용카드 매출채권을 대신한 것이 모기지를 비롯한 자동차대출과 같은 기타 자산이라고 이 세계적인 신용평가기관은 말했다.
· As the growth in bank lending outpaced that of securities holdings, however, the portion of bond and stock holdings to the banks` total assets declined from 26.7 percent in late 1999 to 21.3 percent at the end of December. (출처: The Korea Herald)
하지만 은행대출이 증권투자보다 많아짐에 따라 채권 및 주식이 은행의 총자산에서 차지하는 비율은 1999년 말의 26.7퍼센트에서 12월 말 현재 21.3퍼센트로 감소했다.
· Since then, they have increased their less risky assets and adopted strict lending criteria to clean out their balance sheets and boost their financial soundness. (출처: The Korea Herald)
그 이후 국내 은행들은 리스크가 적은 자산을 선호하기 시작했고 부실 채권을 청산하고 재무 건전성을 강화하기 위해 엄격한 대출 기준을 적용했다.
· KorAm said it scaled back provisions to cover risky credit-card loans, emerging from last year`s industry-wide struggle to reduce bad debts and improve financial health. (출처: The Korea Herald)
한미은행측은 지난 해 금융업계 전반에 걸친 부실채권 감소와 재무건전화 노력에 따른 신용카드 대출 부실화를 대비해 충당금 규모를 축소했다고 말했다.
· The news comes at a time when Korean SMEs, the hardest hit by sluggish domestic demand, are facing severe liquidity problems as local banks refuse to extend fresh loans to these troubled firms. (출처: The Korea Herald)
이번 채권 발행 소식은 국내 은행들이 경영난에 처한 기업에 신규 대출을 꺼리는 바람에 내수 침체로 심한 타격을 받고 있는 국내 중소기업들이 심각한 유동성 문제에 직면하고 있는 상황에서 나온 것이다.
· The onset of Korea Housing Finance, which sells bonds to use the proceeds to buy mortgages and allows borrowers easy access to 10-year or longer-term housing loans, has also propelled bank lending, bank officials explained. (출처: The Korea Herald)
채권을 매각한 대금으로 모기지를 매입하여 차입자들이 10년 이상의 장기 주택대출을 쉽게 받을 수 있도록 하는 한국주택금융공사가 발족함에 따라 은행들의 대출도 늘어났다고 은행 간부들은 설명했다.
· Mortgage loans traditionally consume more time to settle than other credit lendings, which makes some of them temporarily labeled doubtful, said Han. (출처: The Korea Herald)
“전통적으로 주택담보 대출은 여타 여신에 비해 상환 기간이 길기 때문에 그중 일부는 부실채권이 될 가능성이 있다”고 한 연구위원은 말했다.
· Basis Point Publishing Ltd., a Hong Kong-based provider of Asia-Pacific debt market information, said that Sumitomo Mitsui Banking Corp. has been mandated for the $200 million two-tranche deal for Hyundai Motor Manufacturing Alabama LLC. (출처: The Korea Herald)
아태지역 채권시장 정보를 제공하는 홍콩 소재 기업인 베이시스포인트 출판사는 수미토모미쓰이뱅킹사가 현대차 앨라배마 공장과 2가지의 트랜치 (tranche: 조달방식 종류)로 2억달러 규모의 대출 계약을 체결했다고 말했다.



캠코, 이달 희망퇴직...11년까지 15% 감원
이달중 은행 부실채권 1조 매입저축은행 부실PF채권 규모 1.3조→1.7조원
입력 : 2008.12.12 09:00

기업은행
8,940

60

0.67%















[이데일리 장순원기자] 한국자산관리공사(캠코)가 금융 공기업 중 처음으로 대규모 구조조정에 나선다. 또 캠코는 이달 중 시중은행의 부실채권 1조원 가량을 추가로 매입한다.12일 이철휘 캠코 사장은 서울에 있는 한 식당에서 기자 간담회를 갖고 "업무량이 크게 늘고 있는 상황이지만 정부의 공기업 경영 효율화 정책에 발맞추기 위해서 대규모 인력 감축을 단행할 수밖에 없는 상황"이라며 이같이 밝혔다.그는 " 2011년까지 현재 인력의 15%를 감축할 예정"이라며 "이달 중 7~8%의 희망퇴직 신청을 받을 계획이며 노조와도 어느정도 협의가 끝난 상황"이라고 말했다.이 사장은 다만 금융위기 상황에서 캠코의 역할과 업무가 늘고 있어 내년 신규채용과 새로운 업무에 필요한 전문인력의 보강은 반드시 이뤄질 것이라고 강조했다.또 캠코의 올해 부실채권 매입액은 3조5000억원으로 원래 계획보다 4배 늘어난다. 시중은행의 부실채권을 1조원 가량 추가로 매입하고, 당초 1조3000억원으로 예상했던 저축은행의 부실PF채권이 4000억원 가량 증가해서다. 캠코는 올 한해동안 8000억원의 부실채권 매입할 계획이었다.이 사장은 "우리은행과 기업은행(024110)등 시중은행에서 부실채권을 캠코에 넘기겠다고 요청한 상태"라며 "12월 중 은행 등에서 1조원 규모의 부실채권을 인수할 예정"이라고 설명했다. 그는 "당초 1조3000억원 규모의 저축은행 부실PF채권을 매입하려 했으나 실사결과 1조7000억원으로 늘어났다"면서 "회계법인을 선정해 개별 건별로 실사과정을 거친 후 저축은행, 사업자, 캠코 등이 합의해 적정가격을 산정할 계획"이라고 밝혔다.이어 "실제 부실PF채권의 매입절차는 좀 더 늦어질 수 있다"며 "12월 중에 시범적으로 한두 곳을 하고, 이후 내년부터 본격적인 매입이 시작될 것"이라고 덧붙였다.이밖에도 그는 "리먼브러더스와 메릴린치가 아시아에서 제대로 정리하지 못한 부실자산에 관심이 많다"면서 "외화를 가지고 직접 투자 하는 것은 부담스러워 여러가지 방안을 생각하고 있다"고 말했다. 이 사장은 쌍용건설 매각에 관해 "원칙대로 진행할 것"이라며 동국제강(001230)의 매각 유예요청을 받아들일 수 없다고 못박았다.

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캠코, 저축銀 부실PF채권 1.3조 매입(종합)
기사입력 2008-12-03 16:24 박수익 sipark@asiae.co.kr
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정부가 자산관리공사(캠코)를 통해 저축은행의 부실한 부동산 프로젝트파이낸싱(PF) 대출채권을 매입한다. 2003년 카드채 사태 이후 처음으로 대대적인 금융권 부실채권 매입에 나서는 것이다.정부는 다만 추가적인 PF대출 부실을 막기 위해 저축은행에 배당제한, 자본확충 등 강도높은 자구노력을 요구하기로 했다. 금융위원회와 금융감독원은 3일 저축은행 89개의 PF사업장 899개에 대한 실태조사 결과, 부실 또는 부실 우려가 있는 164개 사업장의 1조3000억원 규모 PF대출채권을 매입할 예정이라고 밝혔다.◆PF대출 연체금 1.7조...연체율 최대 19%까지 상승가능이번 실태조사 결과 저축은행의 전체 PF대출 금액(12조2000억원) 기준으로 사업성을 평가한 결과 '정상' 55%(6조7044억원), '주의' 33%(3조9926억원), '악화우려' 12%(1조5130억원)로 각각 분류됐다. 사업장(899개) 기준으로는 정상 50%(447개), 주의 29%(263개), 악화우려 21%(189개) 순으로 집계됐다.'주의'는 사업진행에 일부 애로요인이 있지만 사업성은 양호하다고 판단되는 곳이며, '악화우려'는 사업진행이 지연되면서 사업성도 미흡하거나 추진곤란한 곳이다.PF사업장 중 연체가 있는 곳은 전체 사업장의 24%인 210개, 금액으로는 14%인 1조7000억원으로 나타났다. 금융당국은 '악화우려'가 있는 곳 중 연체가 발생하지 않는 68개(5931억원)에서 향후 연체가 발행할 경우, 저축은행의 PF대출 연체율은 최대 19.1%까지 상승할 수 있을 것으로 전망했다.◆부실PF채권 1.3조원 매입금융당국은 자산관리공사를 통해 부실우려가 있는 사업장 164개(1조3000억원)의 PF대출채권을 매입키로 했다. 캠코는 부실 PF 매입대금의 일부는 현금으로 지급하고 나머지는 선순위채 혹은 후순위채로 줄 예정이다. 김광수 금융위 금융서비스국장은 "현재 캠코의 자금여력으로 PF대출채권을 매입하는데는 문제가 없어 지금 당장은 자본확충 필요성이 없다"며 "다만 향후 상황에 따라 증자 필요성은 항상 있을 수 있다"고 말했다.캠코의 우선 매입 대상은 악화우려로 분류된 사업장에서 연체중인 채권이다. 121개 사업장의 9000억원 규모의 채권이 여기에 해당된다. 자산관리공사는 환매 등의 조건으로 충당금 적립수준(30%)을 제외한 약 70% 수준의 할인금액으로 매입하게 된다.'악화우려'로 분류된 사업장 중 연체는 아니지만 토지매입이 70%이상 완료된 43개 사업장의 4000억원 규모 채권도 환매 등의 조건으로 매입하게 된다.금융당국은 저축은행이 환매 또는 사후정산에 따른 추가손실 예상금액에 대해 2~3년간 단계적으로 충당금을 적립할 수 있도록 허용키로 했다. 김광수 국장은 "부실우려 자산의 조기정리를 촉진해 최소 7%포인트에서 최대 10.4%포인트의 연체율 하락 효과가 기대된다"고 밝혔다.금융당국은 연체상태지만 사업성이 양호하다고 판단되는 곳은 매입대상에서 제외하고 저축은행 자체적으로 공매 또는 상각토록 유도한다는 방침이다.◆위크아웃 활성화, 자구노력 요구금융당국은 저축은행 워크아웃 활성화를 위해 동일계열 저축은행간 컨소시엄 PF대출 워크아웃을 허용하고, 3개월 이상 연체채권 요건도 폐지토록 했다. 다만 담보확보가 가능토록 토지매입률이 70%이상인 경우에만 워크아웃이 허용된다.금융당국은 또 저축은행 부실 PF대출을 매입해주는 대신 자구노력도 요구하기로 했다.국제결제은행(BIS) 자기자본비율이 5% 미만으로 하락할 것으로 예상되는 저축은행에 확약서 등을 징구하는 형태로 자본확충계약을 받아 이행상황을 점검키로 했다. BIS비율이 5% 이상 7% 미만(그레이존)으로 예상되는 경우 8%에 도달할 때까지 배당제한을 유도할 계획이다.김광수 국장은 "인수합병(M&A)이나 자체 정상화가 곤란하다고 판단되는 경우에는 법과 절차에 따라서 신속한 구조조정을 추진할 것"이라고 밝혔다.박수익 기자 sipark@asiae.co.kr김재은 기자 aladin@asiae.co.kr<ⓒ아시아 대표 석간 '아시아경제' (www.asiae.co.kr) 무단전재 배포금지>



BOK to Additionally Supply 6.5 Trillion Won This Week


The Bank of Korea (BOK) on Monday disclosed of its plan to additionally supply 6.5 trillion won liquidity via a long-dated repurchase agreement (RP) deal within this week. BOK plans to support total 2.5 trillion won for financial institutes financed by a bond market stabilization fund in a form a RP on this day, and buy 2 trillion won of a 91-day RP on December 16, a 28-day RP on December 19. The recent RP purchase is to be implemented for 12 securities firms selected as new RP trade institutes along with local banks. Majority of securities subject of a RP trade is composed of bank and special bonds holding credit risks. “Upon increasing the RP purchase scale on bank and special bonds, new credit investment will be expanded through financial institutes. In particular, a long-dated stabilization fund supply for financial institutes will contribute in preventing an irregular capital flow such as rapid fund retrieval ahead of a year-end account settlement,” a BOK official stated. [Eun-jung Kim / JYJ]



Exchange Stabilization Fund Increased to 20 Trillion Won in 2009


Korea’s economy is expected to face difficulties such as a slow economic growth rate next year due to the global economic crisis, but given that drastic measures are carried out in efforts to counter the crisis, the government projected that growth will get back on track in 2010. The Ministry of Strategy and Finance on Tuesday reported 2009 economic policies to President Lee Myung-bak, disclosing plans to strengthen liquidity support for small- and medium-sized enterprises to promptly overcome the financial crisis, while also inducing stable market rates and lifting the burden on household debt. Furthermore, the ministry seeks to supply foreign currency liquidity when needed and expand exchange stabilization funds to 20.6 trillion won by next year. It will also increase support directed towards the Export-Import Bank of Korea in order to ease market uncertainty and maintain a current account surplus, while also adding on more guarantees and insurances for export businesses such as shipbuilding firms. In addition, 65 percent of fiscal expenditures will be spent in the first half, concentrated on sectors that play a big role in creating jobs, while local tax systems will also be reformed. The plans also include heightened support measures to distribute workplaces and upgrade the level of support for maintaining the current number of employees while expanding government support for paid leave, training and shortened work hours. Furthermore, the economic and social security net will be extended to increase education funds for low-income households, while educational welfare will be improved to give more scholarships to students from low-income classes as well as students majoring in science and engineering. For the unemployed and those who lost jobs as businesses shut down, the government will provide emergency support in the form of living expenses and job training until a new workplace is found, thus preventing a temporary factor from leading to a permanent plunge into poverty. [Eun-young Sa / JYJ]



Market Rates Draw Downward Curve


Market rates tumbled on the first day that the bond market stabilization fund was operated. As news spread that the U.S. had entered into a range of virtually zero interest rates, the won’s value also surged in the foreign exchange market. The certificate of deposit (CD) interest rate on Wednesday declined 0.15 percentage point from the preceding day to close the session at 4.34 percent. It plunged 1.1 percentage point over the past week since December 10 (5.44 percent). The CD rate dropped 0.69 percentage point from 5.44 percent to 4.75 percent on December 11, the day that the Bank of Korea carried out a drastic benchmark rate cut by 1 percentage point. Since then, it has drawn a downward curve for three consecutive days since December 15. To this end, commercial banks are also lowering interest rates on mortgage loans. The lowest interest rate for floating-rate mortgage loans dropped to the low- and mid- 5 percent range, while the highest interest rate, which had once soared to the upper end of 8 percent, settled in the 6 percent level. The yield on the three-year government bond edged down 0.01 percentage point to close at 3.84 percent. The distribution rate of corporate bonds also fell steeply to enter into the 7 percent level for the first time in three months. The yield on unsecured AA-rated three-year corporate bonds retreated 0.07 percentage point to finish the session at 7.98 percent. The won’s value against the greenback also jumped 24.6 won from the preceding day to record 1,325 won. Foreign investors contributed to the rise in the won’s value by net purchasing more than 100 billion won in the stock market. 　 [Eun-young Sa / JYJ]



Market Stabilization Fund to Be Injected into Stocks and Bonds

2008-12-18 18:48:21

Korea's securities-related organizations will inject 103 billion won in joint funds into the domestic financial markets to help stabilize them, starting Friday.The money is part of a 515-billion-won fund created last month jointly by the Korea Securities Dealers Association, the Korea Exchange and the Korea Securities Depository.The organizations will pour 103 billion won a month into the stock and bond markets for five months from November.More than 80 percent of the money will be injected into stocks, with the rest in bonds.As of Thursday, the fund shows a return rate of over 20 percent.


515 Billion Won Joint Fund to be Created to Revive Stock Market


Securities related institutes are to establish a joint fund scaled over 500 billion won, intended to be injected in the stock market as of this month for stabilization. According to the Korea Securities Dealers Association (KSDA) on Thursday, Korea Exchange (KRX), Korea Securities Depository (KSD), KSDA and Asset Management Association of Korea (AMAK) are to create a 515 billion won joint fund to monthly inject 103 billion won in the securities market from November 20 at the earliest to March next year. KRX invested 250 billion won, KSD 210 billon won, KSDA 50 billion won and AMAK 5 billion won in the fund. The newly established fund will be investing in listed shares and government and public bonds at an 80 to 20 percentage. Of the listed stocks, investment ratio for KOSPI (Korea Composite Stock Price Index) and KOSDAQ (Korea Securities Dealers Automated Quotations) markets will be operated at 80:20 for three years. Meanwhile, listed stocks will be devised into an index fund to allow index observation. The institutes will soon select 10 asset mangers and distribute 51.5 billion won to each firm. The recently established fund is scaled 100 billion won bigger than the 400 billion won joint fund that had been created in 2003. The 2003 joint fund had achieved an annual average return rate of 13.46 percent and accumulative return rate of 60.5 percent for four years, achieving both stock market stabilization and hefty profitability. [Dong-eun Lee / JYJ]



Tax Agency to Increase Refunds to Mom & Pop Businesses

2008-12-18 17:45:50

Korea's tax agency plans to increase tax refunds to self-employed people running small businesses. The National Tax Service reported to President Lee Myung-bak on Thursday that it will expand tax refunds from the amounts collected in income tax to valued added and transfer tax.The agency said it has already refunded 71-point-one billion won in income taxes to nearly one-point-four million people this year.However, the agency also plans to strengthen its audits on the self-employed running high-income businesses.


S. Korea's top priority is to save jobs, help smaller businesses: minister SEOUL, Dec. 19 (Yonhap) -- The government will place top priority on helping small and medium-sized enterprises next year in a bid to prevent further job losses amid worsening economic conditions, a top policymaker said Friday. "The first half of next year will be the worst period (for the South Korean economy)," Finance Minister Kang Man-soo told a weekly crisis management meeting. "We have paved the way for getting over the ongoing crisis but small and medium-sized companies will have the most difficult time."South Korea's jobless rate stood at 3.1 percent in November with job creation falling to a 5-year low as companies refrained from hiring amid a bleak economic outlook. The economy generated 78,000 new jobs last month, far less than the government target of 200,000.

Kang said that most job losses occurred among those in their 20s and 30s, adding that behind the slumping recruitment market are smaller companies struggling from ongoing economic woes. In a related comment, Kang called for the Ministry of Land, Transport and Maritime Affairs to review its anti-speculation measures "from scratch," expressing concerns that "asset deflation" could derail government efforts to prevent further job losses.



S. Korea provides tax reduction on vehicles to stimulate consumption SEOUL, Dec. 19 (Yonhap) -- The government said Friday that it started to provide temporary tax reductions on the purchase of cars as part of efforts to stimulate fast-slumping consumption and shore up the overall economy. Special consumption taxes on passenger vehicles with engine displacements of 2,000 cc or lower have been cut to 3.5 percent from the previous 5 percent, the Ministry of Strategy and Finance said in a statement. The tax rate on passenger cars with engine displacements exceeding 2,000 cc has also been trimmed to 7 percent from 10 percent. The lowered tax rates will be effective on cars to be sold starting Friday until the end of June next year, the ministry said. The move is intended to stimulate slumping private spending at a time when exports growth, the nation's key growth engine, is slowing at a faster-than-expected pace. It is also in line with the ministry's policy priority for next year which focuses on tax reduction and eased administrative red tape to fuel consumption and business activities in the face of growing concerns over a worldwide economic slump.


Daesung Group to build solar thermal power plant SEOUL, Dec. 19 (Yonhap) -- Daesung Group, an energy-focused business conglomerate, said Friday it will build a solar thermal power plant in southeastern South Korea, as part of government efforts to reduce greenhouse gas emissions. The tower-type plant with 200 kilowatts of generation capacity will be built at a site near the city of Daegu, 302 kilometers southeast of Seoul, Daesung said in a statement. The Ministry of Knowledge Economy and two private companies will invest a total of 11.6 billion won (US$89.8 million) to build the plant by 2010, according to the statement. Unlike traditional solar panel plants, a solar thermal power plant generates electricity by concentrating the sun's heat using mirrors and other lenses. The heat can then be stored and used to generate power when needed.


Seoul stocks trade higher on bank recapitalization plan SEOUL, Dec. 19 (Yonhap) -- South Korean shares inched up 0.07 percent Friday as a government plan to shore up local lenders soothed investors jitters, analysts said. The benchmark Korea Composite Stock Price Index (KOSPI) added 0.83 points to 1,176.74 as of 11:20 a.m. "The government's bank recapitalization plan helped the key index remain in positive territory despite days of Wall Street losses," said Bae Sung-young, an analyst at Hyundai Securities. Seoul pledged Thursday to create 20 trillion won (US$15.5 bln) fund to recapitalize cash-strapped local lenders. Such a move could increase the size of loans available to businesses and help to lower interest rates. U.S. shares tumbled Thursday as dismal corporate outlooks and slumping oil prices worsened market jitters. The Dow Jones industrial average shed 2.49 percent and the tech heavy Nasdaq fell 1.71 percent. The local currency was trading at 1,292.45 won to the U.S. dollar as of 11:20 a.m., down 0.95 won from Thursday's close.



Seoul, Paris hold talks on military cooperation SEOUL, Dec. 19 (Yonhap) -- South Korea and France on Friday held high-level military talks to seek ways to increase defense cooperation and enhance their mutual understanding of current international security issues, the defense ministry said. "At the talks, the two sides exchanged views on regional security conditions while each side presented their defense policies, defense reform measures and international peacekeeping operations," the ministry said in a press release. Seoul and Paris have held the annual military dialogue since 1996. The two nations upgraded the talks last year to deputy-ministerial level. Seoul's deputy defense minister for policy, Jeon Jei-guk, and Michael Miraillet, director of the policy and strategic affairs department at the French defense ministry, led the talks.


Senior farm ministry officials resign en masse SEOUL, Dec. 19 (Yonhap) -- Senior officials at the Ministry for Food, Agriculture, Forestry and Fisheries offered to resign en masse on Friday as the Lee Myung-bak administration takes steps to tighten its hold on the bureaucracy. The decision by three ranking bureaucrats at the ministry's headquarters and the head of the National Fisheries Research and Development Institute (NFRDI) follows similar steps taken by officials at the Ministry of Education, Science and Technology, the National Tax Service (NTS) and the presidential Cheong Wa Dae. Earlier in the week seven education ministry officials and three from the NTS said they would resign. Kim Jae-soo, chief of the ministry's Planning and Coordination Office, Chung Seung head of the Food Industry Headquarters, Bae Jong-ha of the Fisheries Policy Office tendered their resignations starting late Thursday. Park Chong-guk, NFRDI director in Busan, also tendered his resignation. All officials who offered to resign are so-called executive level officials who fill the uppermost tier of the bureaucracy. They are referred to as assistant and deputy ministers and rank just under vice ministers. At present there are 291 executive official-level posts in the government of which 45 are presidential aides. A ministry source said that the decision was taken voluntarily and there was no pressure exerted from above. Political pundits, however, speculated that the string of resignations may be linked to President Lee's ongoing effort to tighten control over bureaucrats that rose through the ranks under the past two liberal administrations. There has been growing frustration within the ruling camp that many officials were not supportive of new policy initiatives set forth by the president. yonngong@yna.co.kr


Lee proposes removing bubbles from public, private sectors By Yoo Cheong-moSEOUL, Dec. 19 (Yonhap) -- President Lee Myung-bak on Friday called for the elimination of bubbles across the public and private sectors in order for South Korea to tide over the ongoing financial crisis and drastically overhaul its inefficient economic structure. During his visits to the port of Incheon, west of Seoul, and a nearby car plant of GM Daewoo Auto and Technology, Lee said that the nation has to take the economic crisis as an opportunity to reform its backward labor practices and upgrade its overall corporate competitiveness. "Bubbles should be removed from both private corporations and the state sector. Only a country choosing to overhaul its economic structure would survive the crisis," Lee said, indicating his intention to accelerate business restructuring. "But the labor and management are unable to overcome the crisis through conventional crisis-management methods. Unprecedented measures are needed to fight the unprecedented crisis. Individual economic entities should be ready to make sacrifices to some degree to survive," said the president. Friday marked the first anniversary of Lee's presidential election victory, his 67th birthday and his 38th wedding anniversary. Port workers offered congratulations for the anniversaries after sharing breakfast with the president. "Economies across the world are now in dire conditions. Creation of new jobs is important, but retaining the current jobs is also important. Economic times will be very severe over the next one to two years. Let's share and endure the pain together," said Lee. During his meeting with GM workers, Lee expressed his intention to support the struggling local automakers. "General Motors of the U.S. is now too ill to be rescued through infusion of taxpayer money. But the situation of GM Daewoo is different. It is one of the world's best-performing GM car plants," said Lee. "It's my second visit to GM Daewoo plant in a year. I'm convinced this GM plant in Korea should be kept alive."Amid a slowdown in domestic and overseas sales and rising inventories, GM Daewoo has been enforcing a one-month suspension of operations at most its car plants across the nation, starting early December.



FTC Chairman: ‘Korean Economy to Deregulate Further’


The Fair Trade Commission (FTC) Chairman Baek Yong-ho stated on October 30, “Korean economy imposes excessive market regulations compared to advanced nations including the U.S. The government will consistently promote policies that can reinforce the roles of market.” During a lecture themed, ‘The Roles of Competition Policies in the Korean Economy’ held on October 31 at the Korea Economic Institute (KEI) in Washington D.C., FTC Chairman Baek remarked such statement while explaining on the Lee Myung-bak administration’s policy directions regarding the economic regulations. He claimed, “As the limit of neo-liberalism has been revealed amid the recent global financial crisis, it was criticized that the Korean government should strengthen its market-centered policies such as regulation ease, tax cut, and privatization on public corporations.” He went on to say, “However, since market regulations in the Korean economy are more excessive than advanced nations such as the U.S., appropriate policies should be taken while fully obeying the principles of market economy and consistently focusing on expanding long-term growth potentials.” Chairman Baek also stated, “Under Korea’s economic structure where phases such as market expansion via opening doors to diverse markets around the world, and structural change in the market has been rapidly progressing, thus the government is no longer able to keep pace with such market circumstance. If the government carries out policies that retrogresses the market flow, it could rather generate side effect.” He continued, “Consequently, the Korean government is recognizing that the very beginning of implementing the changed paradigm is to shed the notion that the government can and should carry out every policy in the market.” [Eun-jung Kim / JYJ]



[fn editorial] We welcome early lifting of cross-affiliate shareholding restrictions
Restrictions on cross-affiliate shareholdings by conglomerates are set to be lifted. Though the timing of the action has yet to be determined, it appears to be just a matter of time before the restriction is lifted, as President-elect Lee Myung-bak’s transition team has decided to deregulate the policy in line with Lee's campaign pledge. To preempt possible loopholes due to the lifting of the restriction, the team has decided to ease legal requirements for companies that seek to transform into holding companies in order to encourage enterprises to voluntarily become holding firms. The lifting of cross-subsidiary shareholdings, though belated, is a step in the right direction. This restriction runs counter to Lee’s plan to expand corporate investment to revive the sagging economy. It is hard to understand how the restriction has remained effective as it weighs heavily on Korean firms in this era of unbridled global competition. The Fair Trade Commission should now ease the shareholding restriction and change the preemptive-regulation scheme to a market-friendly, post-regulation policy. Once the shareholding restriction is lifted, however, side-effects of circular cross-affiliate shareholding practices could build up. Companies are well aware of the weakness of the circular cross-affiliate investment practice, which allows a third party to take control over all different affiliates in a conglomerate once it acquires the managerial right to a key player in the conglomerate. SK Group transformed into a holding company because it realized the limits of cross-affiliate shareholding following Sovereign’s attempt to take over control of the entire conglomerate. However, companies have had difficulties as they to turn into holding companies due to requirements in debt-to-equity ratios and stakes in subsidiaries. These requirements need to be eased. To lift cross-affiliate shareholding is to release conglomerates from shackles. Through the lifting of this restriction along with the planned easing of the restriction on the separation of industrial capital from financial capital, the Lee Myung-bak government has laid the foundation to help boost corporate investment. Companies themselves, however, need to understand that such deregulations must be accompanied by responsibility. They should not allow those who are opposed to deregulation to find room for making their case.


Chaebol-Owned Banks
Policy Should Rest on Reality, Not Wishful ThinkingIt takes lots of courage ― or ignorance ― for anyone to choose a path that few others would take.We hope the government's policy to tear down the wall that has long kept industrial capital from owning banks will belong to the former case, but can't help worrying the latter might be true.Officials say the new rule, which allows industrial firms and pension funds to hold up to 10 percent of equities in banks, up sharply from the present 4-percent limit, is inevitable to expand the sector's scale and enhance its competitiveness, while preventing financial domination by foreign capital.``The global financial crisis will not last forever, so we don't have to put off shaping an institutional framework to be needed after things return to normalcy,'' said a ranking official at the Financial Services Commission (FSC).Of course the worldwide financial turmoil will not ― and must not ― continue indefinitely. For countries that fail to learn its lessons correctly, however, the pain will last longer and be sharper. While most other countries are moving toward re-regulation and re-nationalization of banks, Seoul is sticking to the tested and failed course ― at least for now ― of deregulation and privatization.True, different countries have different situations, and financial regulators may be able to keep banks from turning into ``private safes'' of family-controlled conglomerates through tight supervision, as the officials confidently say.A policy, however, should be based on reality instead of a theory, or worse, wishful thinking. The track records of both Korea's governmental regulators and private-sector firms show things will unlikely turn out the way the officials want.Take the Samsung Group scandal, in which not just its own brokerage unit but also other securities companies and a large commercial bank ended up serving as the private coffer of the nation's largest chaebol by making up thousands of bogus financial accounts and committing other irregularities blindsiding regulators.As doubtful as the giant business groups' lack of transparency is their ability to run financial businesses. One has to look no further than the credit card fiasco years ago, brought about by the blunders of the nation's Nos. 1 and 2 chaebol, throwing millions of consumers into difficulties. And the plastic money business is no match for commercial banking, let alone investment banking, in industrial sophistication.No less problematic is the government's supervisory capability, as not just the FSC but also Bank of Korea have long been reduced to a virtual executive agency of the Ministry of Strategy and Finance.To sum up, the conglomerates, the only industrial capital with sufficient resources to own and run banks, are currently neither transparent nor able enough to evaluate risks, and the government cannot supervise them to implement its proposed policy in the near future.If the industry cannot ensure competitiveness through the change, it should at least be able to protect depositors and investors with sufficient safety and soundness.Even acknowledging the government's good intention and even some of its theory, a question still remains: Why now ― of all times?This is no time to cite the corporate saying, ``There is an opportunity in every crisis.'' A saying that better fits the current situation is ``Look before you leap.''




BOK pledges to supply ample liquidity in timely manner SEOUL, Dec. 19 (Yonhap) -- The chief of South Korea's central bank repeated his pledge on Friday to provide sufficient liquidity to the financial system in a timely manner to help ease a credit crunch. "In the (current) financial turmoil, local banks... also need to step up efforts to stabilize the financial system," Bank of Korea (BOK) Gov. Lee Seong-tae said in a meeting with the heads of nine local banks. South Korean lenders have been suffering from cash shortages as they have faced trouble in rolling over debt or raising funds amid the global financial turmoil. The BOK said on Monday it would pump a combined 6.5 trillion won (US$5 billion) in liquidity into the banking system this week by buying longer-dated repurchase agreement deals. The government and the central bank have supplied or plan to supply a combined amount in excess of 130 trillion won in liquidity into the financial system.


BOK Holds 2.7 Trillion Won in Bank Bonds, Special Bonds

The Bank of Korea announced on Tuesday that it holds a total 2.6927 trillion won worth in bank debenture and special bonds. On December 15, BOK purchased bonds worth 1.8694 trillion won-- including bank debentures worth 830.3 billion won and special bonds worth 156.9 billion won-- in the form of repurchase agreements from primary financial institution investing in bond funds. Therefore, as of December 15, the central bank holds 2.48 trillion won in bank debenture and 212.7 billion won in special bonds, thus amounting to a total 2.6927 trillion won in bonds. A number of institutions are looking towards the outright purchase of government bonds or the repurchase of monetary stabilization bonds, but other financial institutions seek to independently come up with investments for bond funds, explained the central bank. “We plan to provide liquidity by further purchasing bank debenture and special bonds when necessary,” said a BOK official. The central bank recently announced that it would indirectly provide liquidity by funneling around 5 trillion won into the bond stabilization fund set to be created to a scale of 10 trillion won. [Eun-young Sa / JYJ]



A Big Wave of Bank Bonds Due Soon
By Lee Hyo-sikStaff ReporterEarly next year will likely be another watershed in Korea's struggle for a soft landing, with a record amount of bank bonds coming to maturity. Businesses and households are also having a tough time making debt payments amid soaring interest rates and stagnant income.The ongoing credit crunch and unstable financial market conditions were caused by foreigners' massive selling of local shares and bonds in the wake of the U.S. financial market meltdown, increasing the dollar outflow and making the won weaker against the greenback. It has made it almost impossible for banks to borrow money from foreign financial institutions amid a global credit crunch or to raise new funds through bond issuance here due to a lack of demand.Faced with a liquidity shortage, they have tightened lending standards for businesses and households. With tight credit conditions and other unfavorable economic variables at home and abroad, many companies are on the verge of collapse, while more families have become unable to make interest payments on mortgages and other borrowings, pushing up the loan default rate.Rising non-performing loans will further weaken the financial soundness of banks and other financial services firms, and force them to further tighten lending rules, aggravating the ongoing credit squeeze and its negative fallout on economic activities.Analysts say if the nation can effectively handle the record-amount of maturing bonds in the first three months of 2009, the domestic financial market will become more stabilized.According to the banking industry Sunday, outstanding bonds issued by domestic banks totaled 183 trillion won as of September. Of the 183 trillion won, bonds worth 21.2 trillion won will mature in the first quarter of the next year, up from 20.7 trillion won in the fourth quarter, posing a challenge for lenders to either renew maturing debts or issue new bonds to service maturing ones.Additionally, corporate bonds worth 3.9 trillion won are scheduled to mature in the first quarter of 2009, up from 3 trillion won a quarter earlier, while households will have to pay back mortgage principal and interest worth up to 50 trillion won in the first half of the year. Of 383.6 trillion won banks extended to households, 234.6 trillion won were home-backed loans as of September.LG Economic Research Institute economist Bae Min-keun said sluggish domestic consumption and falling exports have worsened businesses' bottom lines and household finances, adding a growing number of companies and families will default on debts, hitting lenders hard.With soaring bond yields and plunging prices due to lack of demand, bonds issued by banks and companies have decreased sharply in recent months even though they need fresh funds. Lenders issued bonds worth 4.2 trillion won in October, down 23 percent from a month earlier, while corporate bond issuance totaled 1.4 trillion won, down 27.7 percent.Against this backdrop, the government plans to establish a 10-trillion won bond stabilization fund to boost demand for corporate bonds, and thus help banks and businesses raise money through the market.Separately, it is seeking to inject public funds into struggling local lenders to help them improve their financial status so that they can extend more credit to cash-strapped small businesses.leehs@koreatimes.co.kr



S.Korea c.bank injects 2 trln won via 28-day repos

103 words
19 December 2008
1:51 AM GMT
Reuters News
English
(c) 2008 Reuters Limited

SEOUL, Dec 19 (Reuters) - South Korea's central bank said on Friday it supplied 2 trillion won ($1.54 billion) as planned to the local financial system via 28-day repurchase agreements (repos), with bank bonds included.
Bids received totalled 2.83 trillion won and the funds were supplied at an average interest rate of 3.23 percent, the Bank of Korea said in a statement. (Reporting by Lee Eun-yul, Writing by Cheon Jong-woo; Editing by Jonathan Hopfner)
FINANCIAL/KOREA-REPOS (URGENT)LANGENABNMD
Document LBA0000020081219e4cj0003g


BOK Holds 2.7 Trillion Won in Bank Bonds, Special Bonds

The Bank of Korea announced on Tuesday that it holds a total 2.6927 trillion won worth in bank debenture and special bonds. On December 15, BOK purchased bonds worth 1.8694 trillion won-- including bank debentures worth 830.3 billion won and special bonds worth 156.9 billion won-- in the form of repurchase agreements from primary financial institution investing in bond funds. Therefore, as of December 15, the central bank holds 2.48 trillion won in bank debenture and 212.7 billion won in special bonds, thus amounting to a total 2.6927 trillion won in bonds. A number of institutions are looking towards the outright purchase of government bonds or the repurchase of monetary stabilization bonds, but other financial institutions seek to independently come up with investments for bond funds, explained the central bank. “We plan to provide liquidity by further purchasing bank debenture and special bonds when necessary,” said a BOK official. The central bank recently announced that it would indirectly provide liquidity by funneling around 5 trillion won into the bond stabilization fund set to be created to a scale of 10 trillion won. [Eun-young Sa / JYJ]



캠코, 저축銀 부실PF채권 1.3조 매입(종합)
기사입력 2008-12-03 16:24 박수익 sipark@asiae.co.kr
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정부가 자산관리공사(캠코)를 통해 저축은행의 부실한 부동산 프로젝트파이낸싱(PF) 대출채권을 매입한다. 2003년 카드채 사태 이후 처음으로 대대적인 금융권 부실채권 매입에 나서는 것이다.정부는 다만 추가적인 PF대출 부실을 막기 위해 저축은행에 배당제한, 자본확충 등 강도높은 자구노력을 요구하기로 했다. 금융위원회와 금융감독원은 3일 저축은행 89개의 PF사업장 899개에 대한 실태조사 결과, 부실 또는 부실 우려가 있는 164개 사업장의 1조3000억원 규모 PF대출채권을 매입할 예정이라고 밝혔다.◆PF대출 연체금 1.7조...연체율 최대 19%까지 상승가능이번 실태조사 결과 저축은행의 전체 PF대출 금액(12조2000억원) 기준으로 사업성을 평가한 결과 '정상' 55%(6조7044억원), '주의' 33%(3조9926억원), '악화우려' 12%(1조5130억원)로 각각 분류됐다. 사업장(899개) 기준으로는 정상 50%(447개), 주의 29%(263개), 악화우려 21%(189개) 순으로 집계됐다.'주의'는 사업진행에 일부 애로요인이 있지만 사업성은 양호하다고 판단되는 곳이며, '악화우려'는 사업진행이 지연되면서 사업성도 미흡하거나 추진곤란한 곳이다.PF사업장 중 연체가 있는 곳은 전체 사업장의 24%인 210개, 금액으로는 14%인 1조7000억원으로 나타났다. 금융당국은 '악화우려'가 있는 곳 중 연체가 발생하지 않는 68개(5931억원)에서 향후 연체가 발행할 경우, 저축은행의 PF대출 연체율은 최대 19.1%까지 상승할 수 있을 것으로 전망했다.◆부실PF채권 1.3조원 매입금융당국은 자산관리공사를 통해 부실우려가 있는 사업장 164개(1조3000억원)의 PF대출채권을 매입키로 했다. 캠코는 부실 PF 매입대금의 일부는 현금으로 지급하고 나머지는 선순위채 혹은 후순위채로 줄 예정이다. 김광수 금융위 금융서비스국장은 " 밝혔다.



INVESTORS are rediscovering bonds as yields have soared to their highest level for five years.
The yields on some bonds issued by banks, which show the income you earn as a proportion of their price, are higher than the returns on their best savings accounts.
You can get a yield of 8.2% from an HSBC bond, for example, compared with just 6% on its cash Isa, while Halifax bonds are paying 8.35%, compared with its cash Isa rate of 6.2%.
Yields are so high because prices have been hit by the credit crunch, as investors fear banks could default on their bonds following the collapse of both Northern Rock, the mortgage bank, and Bear Stearns, the US investment bank.
When prices fall, yields rise, and vice versa. However, some analysts think that the risk of another bank going bust has been overplayed and that some bonds now offer great value.
Nigel Parsons, investment manager at Bestinvest, an adviser, said: “Investors should ask themselves the question, if I am happy to lend Abbey money at 6.25% via their Isa, why would I not buy corporate debt from them which yields me 7.88%?”
Ben Yearsley at Hargreaves Lansdown, an adviser, agrees. He said: “I never thought I’d buy into bonds, but a couple of weeks ago I bought three funds - the Invesco Perpetual Monthly Income Plus, the Henderson Strategic and New Star Extra High Yield – and put them into my Isa.
“The opportunity just looked too good. On the New Star fund, you’re getting an 11% yield, Invesco about 7.8% and Henderson about 6%.”
Corporate bonds are basically loans to companies. The company pays a fixed income to the investor, which is the equivalent of the interest on a loan.
If you hold a bond to maturity, you get your capital back in full – as long as the company doesn’t go bust.
Once issued, bonds are traded on the stock market, so their prices go up and down depending on demand. If you sell a bond before maturity, therefore, you could get back less than what you paid. However, bonds are not generally as volatile as shares.
Many corporate bonds are currently trading below the issue price as a result of the credit crunch. Every £100 worth of Barclays bonds, for example, costs £96, giving you a 4% capital gain if you held the bond until maturity.
At issue, each £100 bond was yielding 6.875%. That £6.88 is now equivalent to a yield of 7.16% given that the price has fallen.
Payments on corporate bonds also take priority over dividends and equities so you are more likely to be paid in a crisis anyway.
Northern Rock bondholders with the most senior tier of debt are likely to get their money back in full as a result of the nationalisation of the bank, although those investors with lower-grade debt will only get limited compensation.
You can invest in a corporate bond directly by buying individual stocks through your broker although you will need to invest at least £10,000 to do so. Alternatively, you can buy through an investment fund.
Bestinvest likes the New Star Sterling Bond fund, managed by Philip Roantree, which is up 66% over the past 10 years.
The fund holds bonds issued by Bradford & Bingley, the Bank of Ireland and Alliance & Leicester.
All have been hit hard by the Northern Rock crisis, but that could present an opportunity for brave investors.
Alternatively, the Invesco Perpetual Corporate Bond fund run by Paul Causer and Paul Read has been a more stable performer, although its yield is lower at 3.5%.
You can invest more into a corporate bond fund via a stocks and shares Isa than you can in a straightforward cash Isa – £7,200 versus £3,600.
Bond income is classed as interest, so outside an Isa 20% tax is deducted at source and higher-rate taxpayers must paya further 20% through their tax return. Inside an Isa, the income would be tax free.


UPDATE 1-POSCO says mulling share swap for KB Fin stake

461 words
19 December 2008
1:13 AM GMT
AFX Asia
English
(c) 2008, AFX Asia. All rights reserved.

SEOUL, Dec 19 (Reuters) - Steelmaker POSCO said on Friday it was considering swapping shares in itself for a stake in South Korea's KB Financial Group, a move seen helping the holding group lower its own shareholding. The remarks came after online news provider Edaily reported that KB Financial, parent of top South Korean retail bank Kookmin, would reach a share swap deal worth 300 billion won ($231 million) with POSCO, citing unnamed industry sources. "It's true we're considering the share swap," POSCO spokeswoman Ko Min-jin said. "A board meeting is scheduled today but we don't know whether they will decide on the matter." A spokesmen for KB Financial said he was looking into the report. For 300 billion won, POSCO would be able to take an about 2.3 percent stake in KB Financial in exchange for a 0.9 percent stake in itself, based on current market prices. For the world's No.
4 steelmaker, a share swap with the third-largest financial holding company in South Korea could increase the number of its friendly shareholders to prepare against a possible hostile bid from global rivals. The reported share deal would be part of KB's effort to sell off a 5 percent stake Kookmin Bank owns in the parent group by the end of March to comply with domestic rules. It would also improve Kookmin Bank's capital ratio, as its treasury stock holdings are not recognised as an equity capital. KB Financial spent 4 trillion won in September to buy a stake in itself to change into a holding company, which resulted in Kookmin Bank owning a 20.66 percent stake in the parent group. The shareholding has decreased slightly since Kookmin sold a 3.2 percent stake in KB Financial for $300 million in block trade last week. In October, Sumitomo Mitsui Financial Group, Japan's third-largest bank, said it would take a stake of up to 2 percent in KB Financial, which currently has a 266 billion won market value. Shares of KB Financial rose 2.62 percent to 37,200 won by 0033 GMT, andPOSCO added 1.66 percent to 399,000 won, outperforming a 0.82 percent gain in the wider market. ($1=1298.4 Won) (Reporting by Kim Yeon-hee and Seo Eun-kyung; Editing by Jonathan Hopfner) Keywords: KBFINANCIAL POSCO/ (yeonhee.kim@thomsonreuters.com; +82 2 3704 5646; Reuters Messaging: yeonhee.kim.reuters.com@reuters.net)


KB지주-포스코, 3천억 규모 지분 맞교환 추진
포스코가 KB금융지주와 3000억원 규모의 주식 맞교환을 추진하고 있는 것으로 알려졌다. 업계 관계자에 따르면 국민은행과 포스코는 19일 각각 이사회를 열고 지분 맞교환 방안을 최종 결정할 예정이다. 현재 주가를 감안하면 양측간 지분 스와프는 포스코 1주당 KB지주 주식 10주 정도가 될 것으로 보인다. 이처럼 양사가 주식 맞교환을 추진하는 것은 국민은행은 국제결제은행(BIS) 자기자본비율이 개선되는 효과를 얻을 수 있고, 포스코도 투자 포트폴리오 다변화와 함께 적대적 M&A에 대비하는 효과가 있기 때문이다. 포스코는 KB지주와 전략적 파트너십을 맺어 투자 포트폴리오의 다변화를 꾀하고 적대적 인수합병에도 대비하는 `일석이조`의 효과를 얻을 수 있을 것으로 기대하고 있다. 국민은행은 지난 9월 지주사 전환 과정에서 20.66%에 달하는 KB지주 지분을 보유하게 됐으며, 이중 계열사로부터 넘겨받은 5.19%는 취득후 6개월 이내, 즉 내년 3월말까지는 처분해야 한다. 또 자사주나 모회사 지분은 자기자본으로 인정되지 않지만, 투자유가증권의 경우 자본인정으로 인정받을 수 있기 때문에 BIS비율이 개선되는 효과도 기대된다. [박종욱 기자] [ⓒ 매일경제 & mk.co.kr, 무단전재 및 재배포 금지]
BOK purchases 1.1 trillion won in bank, other bonds through repos
기사입력 2008-12-17 11:00
South Korea`s central bank said Wednesday it bought 1.1 trillion won ($842.9 million) worth of debt sold by banks and other state-run agencies through repurchase agreement deals in a bid to help ease a credit crunch, Yonhap News Agency reported."The central bank purchased 1.05 trillion won in bank bonds and 68.4 billion won in other debt," the Bank of Korea (BOK) said, adding that the combined purchase of such bonds reached 3.81 trillion won as of Tuesday.On Monday, the central bank said it would pump a combined 6.5 trillion won in liquidity into the financial system this week by buying longer-dated repurchase agreement deals. As part of such a move, the BOK held an auction for 91-day repos on Tuesday to supply 2 trillion won.A repurchase agreement is a deal whereby one party sells the other a security at a specified price with a commitment to buy the security back at a later date. It is the central bank`s main method of releasing liquidity into the market in a credit crunch and siphoning off excess liquidity.In late October, the BOK decided to include bank bonds and some special debts as collateral for its open market operations. On Thursday, it also decided to allow an additional 12 brokerage houses to participate in its repurchase agreement operations to swiftly provide liquidity to the financial system.



Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Term
Definition
Bought in
The process whereby CDP buys shares on the market to satisfy the delivery obligation, if an investor does not have the required shares in his account on the settlement date.
Brokerage commission
A fee charged by a broker for his/her service in facilitating a transaction.
Clearing fee
A fee charged by clearing corporations for their services provided to investment firms.
Close-end fund
A type of fund where there is a fixed amount of shares the fund will issue.
Continuous pricing
Market prices are available throughout the trading day.
Custodian
An agent, bank, trust company, or other organization which holds and safeguards an individual's, mutual fund's, or investment company's assets for them.
Discount
Amount (stated in dollars or a percent) by which the market price of an ETF is below its net asset value.
Diversification
A strategy of spreading investments among many different securities or sectors to reduce the risk of owning any single investment. Diversification reduces both the upside and downside potential and allows for more consistent performance under a wide range of economic conditions.
Dividend
A distribution of earnings to shareholders of a corporation or an investment company.
ETF
Refer to exchange traded fund.
Exchange traded fund
A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.
Foreign exchange risk
The risk of an investment's value changing due to changes in currency exchange rates.
Fund manager
A investment professional whose main responsiblities include investing the assets of a mutual, pension, trust, or hedge fund, implementing investment strategy and managing the day-to-day portfolio trades.
Hedge
A strategy used to manage investment risk.
IIV
Refer to indicative intraday value.
iNAV
Refer to indicative net asset value.
Index
A statistical indicator providing a representation of the value of the securities which constitute it. Indices often serve as barometers for a given market or industry and benchmarks against which financial or economic performance is measured.
Index tracking
A fund designed to track the performance of an index.
Indicative intraday value.
Refer to indicative net asset value.
Indicative optimized portfolio value
Refer to indicative net asset value.
Indicative net asset value
An estimate of the net asset value, which is calculated periodically throughout the trading day.
Interest rate risk
The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between two rates, in the shape of the yield curve or in any other interest rate relationship.
Intraday
During a single trading day.
IOPV
Refer to indicative optimized portfolio value.
Limit order
An order to a broker to buy a specified quantity of a security at or below a specified price, or to sell it at or above a specified price. Limit orders also allow an investor to limit the length of time an order can be outstanding before being cancelled.
Liquidity
The ability to easily turn assets into cash. An investor should be able to sell a liquid asset quickly with little effect on the price.
Margin purchases
Purchasing securities with borrowed money, and using the securities themselves as collateral.
Market day
A day on which Singapore Exchange is open for securities trading
Market maker
A broker-dealer firm that accepts the risk of holding a certain number of shares of a particular security in order to facilitate trading in that security.
Market risk
The day-to-day potential for an investor to experience losses from fluctuations in securities prices. This risk cannot be diversified away.
NAV
Refer to net asset value.
Net asset value
Value of all the fund assets minus the value of the liabilities, divided by the number of shares outstanding.
Open-end fund
A type of fund where there are no restrictions on the amount of shares the fund will issue. Open-ended funds issue new units, or cancel units, as investors move into and out of the fund. This creation and redemption process helps keep the funds market price in line with its underlying net asset value.
Participating dealers
Large institutional investors who are authorized to create and redeem shares of an ETF. They may also be market makers.
Premium
Amount (stated in dollars or a percent) by which the market price of an ETF is above its net asset value.
Primary market
Where a newly issued security is first offered. All subsequent trading of this security occurs is done in the secondary market.
Redemption
The process where Participating Dealer redeems ETF units in exchange for securities from the Fund Manager.
Sales charge
A commission or fee paid by an investor at the time of purchasing mutual fund shares. The charge is paid to a mutual fund salesperson or financial advisor and is intended to provide compensation for the financial salesperson's efforts in assisting their client select the mutual fund best suited to their needs.
Secondary market
The market in which securities are traded after they are initially offered in the primary market.
Security
An investment instrument, other than an insurance policy or fixed annuity, issued by a corporation, government, or other organization which offers evidence of debt or equity.
Settlement date
The third market day following the trade day.
SGX-ST
Singapore Exchange Securities Trading Limited
Short sale
The sale of a security or other financial instrument not previously owned by the seller in the expectation that it will be possible to repurchase that instrument at a lower price some time in the future.
Stock
A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.
Stop-loss order
An order placed with a broker to sell a security when it reaches a certain price. It is designed to limit an investor's loss on a security position.
Trustee
An individual who holds or manages assets for the benefit of another.
Unit trust
An unincorporated mutual fund structure that allows funds to hold assets and pass profits through to the individual owners, rather than reinvesting them back into the fund.
Volatility
The relative rate at which the price of a security moves up and down. Volatility is found by calculating the annualized standard deviation of daily change in price. If the price of a stock moves up and down rapidly over short time periods, it has high volatility. If the price almost never changes, it has low volatility.
Volume
The number of shares or contracts traded in a security or an entire market during a given period of time. It is simply the amount of shares that trade hands from sellers to buyers as a measure of activity.



IN THE MATTER OFTHE SECURITIES LEGISLATION OFBRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,MANITOBA, ONTARIO, QUEBEC, NOVA SCOTIA,PRINCE EDWARD ISLAND, NEW BRUNSWICK,NEWFOUNDLAND, THE YUKON TERRITORIES,THE NORTHWEST TERRITORIES AND NUNAVUT
AND
IN THE MATTER OFTHE MUTUAL RELIANCE REVIEW SYSTEMFOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OFiUNITS MSCI INTERNATIONAL EQUITY INDEX RSP FUND ANDBARCLAYS GLOBAL INVESTORS CANADA LIMITED
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia, Prince Edward Island, New Brunswick, Newfoundland, the Yukon Territory, the Northwest Territories and Nunavut (the "Jurisdictions") received an application from the iUnits MSCI International Equity Index RSP Fund (the "Fund") and Barclays Global Investors Canada Limited ("Barclays") (together, the "Applicants") for a decision under the securities legislation of the Jurisdictions (the "Legislation") that
(a) the registration requirement of the Legislation does not apply to Barclays and the Fund, in connection with their proposed dissemination of sales communications relating to the distribution of securities of the Fund, and
(b) in connection with the proposed distribution of securities of the Fund pursuant to a prospectus, the Fund is exempt from the requirement of the Legislation that its prospectus and any renewal thereof contain a certificate of the underwriter or underwriters who is/are in a contractual relationship with the Fund;
AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System"), the Ontario Securities Commission is the principal regulator for the application;
AND WHEREAS the Applicants have represented to the Decision Makers as follows:
1. The Fund is a trust established under the laws of Ontario, with Barclays as the trustee. Barclays' head office is located in Toronto, Ontario.
2. Barclays is registered in all provinces and territories, other than the Yukon Territory, as a portfolio manager and investment counsel (or the equivalent categories of registration) under the Legislation of such Jurisdictions.
3. The investment objective of the Fund is to provide long term growth in capital by replicating, to the extent possible, the performance of the MSCI Provisional EAFE Index (the "Provisional Index") initially. The Fund will ultimately be replicating, to the extent possible, the standard MSCI EAFE Index (the "Standard Index") following the change in the methodology used by the Standard Index to that used by the Provisional Index (both indices together, the "EAFE Index").4. To achieve its investment objective, the Fund will invest primarily in exchange-traded futures contracts based on the stock market indices in countries that are included in the EAFE Index, and in high-quality short-term money market instruments. The Fund will also use forward and futures contracts to match the currency exposure of the EAFE Index, and may invest in the underlying securities of the EAFE Index, index participation units, trust units and other similar instruments.
5. The Fund will issue units of beneficial interest (the "Units"), which will confer on investors a proportionate share of economic benefits similar to those that investors could obtain through individual investments in the securities comprising the EAFE Index. The Units of the Fund are not expected to constitute "foreign property" under the Income Tax Act (Canada).6. The Fund has filed a preliminary prospectus dated June 19, 2001, with all provinces and territories of Canada, in order to qualify the distribution of its Units to the public on a continuous basis. Upon issuance of a receipt for the Fund's (final) prospectus, the Fund will become a "reporting issuer" under the Legislation of each Jurisdiction where such term is applicable.
7. The Units may be purchased directly from the Fund only by one or more registered dealers or brokers who are also members of The Toronto Stock Exchange (the "Exchange") and who have entered into an underwriting agreement with the Fund (the "Underwriters"). Payment for the purchase price of the Units will be made in cash.8. On the first day on which the Fund accepts purchase orders from the Underwriters, the price will be $20.00 per Unit. Thereafter, Units of the Fund will be issued to the Underwriters, pursuant to purchase orders, at the Fund's net asset value (the "NAV") per Unit next determined after receipt of the purchase orders.
9. The Underwriters will not receive any fees or commissions in connection with the Fund's issuance of Units to them. Barclays may, at its discretion charge transaction and/or administration fees on the issuance of Units to the Underwriters. As trustee of the Fund, Barclays may also require the Underwriters to compensate the Fund for brokerage commissions incurred in purchasing portfolio assets with the subscription proceeds and for the impact of bid offer spreads on the value of the Fund.10. The NAV per Unit of the Fund will be calculated and published daily.
11. The Units of the Fund will be listed and posted for trading on the Exchange.
12. Except as described in paragraph 7 above, the Units may not be purchased directly from the Fund. Investors are generally expected to purchase Units of the Fund through the facilities of the Exchange. However, Units of the Fund will be issued directly to its unitholders (the "Unitholders") upon the reinvestment of the Fund's distributions of income or capital gains.
13. Unitholders who wish to dispose of their Units may generally do so by selling such Units on the Exchange. However, a Unitholder may redeem for cash a prescribed number of Units (the "Prescribed Redemption Number") or a number of units greater than the Prescribed Redemption Number, at a redemption price per Unit equal to the NAV per Unit of the Fund on the effective redemption date. A Unitholder may also redeem for cash a number of Units that is less than the Prescribed Redemption Number, at a redemption price per Unit equal to 95% of the closing trading price of the Fund's Units on the Exchange on the effective redemption date.14. As trustee of the Fund, Barclays will be entitled to receive from the Fund an annual fee (the "Trustee Fee") equal to 0.35% of the NAV of the Fund. Barclays will be responsible for the payment of the expenses of the Fund, except for the Trustee Fee, brokerage commissions and any withholding taxes and income taxes.
AND WHEREAS under the System, this MRRS Decision Document evidences the decisions of the Decision Makers (collectively the "Decision");
AND WHEREAS each Decision Maker is satisfied that the test contained in the Legislation that provides the Decision Maker with the authority to make the Decision has been met;THE DECISION of the Decision Makers under the Legislation is that:
(a) the registration requirement of the Legislation does not apply to Barclays and the Fund, in connection with any dissemination of sales communication relating to the distribution of Units of the Fund, provided that they comply with Part 15 of National Instrument 81-102 Mutual Funds; and(b) in connection with the proposed distribution of Units of the Fund pursuant to a prospectus, the Fund is exempt from the requirement of the Legislation that its prospectus and any renewal thereof contain a certificate of the Underwriters who are in a contractual relationship with the Fund.
August 28, 2001.
"Paul Moore"
"R. Stephen Paddon"
Headnote
Relief granted from certain provisions of securities legislation for initial and continuous distribution of securities of an exchange-traded fund - relief from registration requirement to permit the fund and its promoter to disseminate sales communication promoting the fund, subject to compliance with Part 15 of NI 81-102 - relief granted for the fund's prospectus and any renewal thereof not to contain an underwriter's certificate.
Statutes Cited
Securities Act, R.S.O. 1990, c. S.5, as amended, ss. 25(1) and 59(1).
Rules Cited
National Instrument 81-102, Mutual Fund - Part 15.



What You Should Know About Mutual Funds
A Message from the Secretary
Dear Investor:
There are a number of investment options available to you as a consumer. Many people have chosen mutual funds as their primary means of investing. Mutual funds provide professional management, diversification, convenience and liquidity. As with all investments, mutual funds are not risk free. It is essential that you make an informed investment decision and choose a mutual fund which is right for you depending on your goals, investment time frame and risk tolerance.
Many questions can arise when it comes to mutual fund investing. What is a mutual fund? What are the different types of mutual funds? How do I choose a fund that is right for me? What are the risks? This pamphlet is designed to help answer these basic questions. If you have any questions or need further assistance, please contact my office at 617-727-3548.
Sincerely,
William Francis GalvinSecretary of the Commonwealth
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Mutual Fund Tips
Determine your investment objectives. What is your invest ment goal: preserving principal; generating income; paying for a child's education; or saving for retirement? Choose a mutual fund whose objective is in line with that goal.
Thoroughly understand the risks associated with the mutual fund you are considering and be sure that you are comfort able taking on those risks.
Read and understand all information in the fund's prospectus, Statement of Additional Information, and, if available, its annual report. Call the fund company or the Securities Division if you have questions regarding these materials.
Take the time to study the fund's fee table. Compare the fees among various fund groups before choosing a fund. These fees are expenses of the fund and will significantly affect your returns.
Depending on your own investing experience, decide whether you should invest in a fund directly or through a broker -dealer. A broker-dealer can provide investment advice but will charge a sales load. In some funds you can invest directly without the assistance of a broker-dealer. These funds do not charge a sales load but do not give investment advice.
If you are investing through a broker-dealer or utilizing the services of a financial advisor, contact the Securities Divi sion to see if your broker or financial advisor is registered in Massachusetts or has any past disciplinary matters on file.
If you are investing in a mutual fund sold at your bank or credit union, make sure you understand that the fund is not an insured deposit and that it is not guaranteed by the financial institution, the FDIC or any other federal agency.
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What Is a Mutual Fund?
A mutual fund, also called an investment company, is an investment vehicle which pools the money of many investors. The fund's manager uses the money collected to purchase securities such as stocks and bonds. The securities purchased are referred to as the fund's portfolio.
When you give your money to a mutual fund, you receive shares of the fund in return. Each share represents an interest in the fund's portfolio. The value of your mutual fund shares will rise and fall depending upon the performance of the securi ties in the portfolio. Like a shareholder in a corporation, you will receive a proportional share of income and interest gener ated by the portfolio. You can receive these distributions either in cash or as additional shares of the fund. As a shareholder, you also have certain shareholder voting rights.
A mutual fund's portfolio is managed by a professional money manager. The manager's business is to choose securities which are best suited for the portfolio. Be aware, however, that even a profes sional money manager cannot insure against a loss of principal.
The mutual fund manager will invest in many different securities. This diversification of portfolio assets means that you as an investor have not pinned all your hopes on one company's success. Also, because the portfolio holds many securities, the negative impact that any one company may have on the fund is diminished. While diversification is a benefit of mutual fund investing, a mutual fund is still impacted, either favorably or unfavorably, by the ups and downs of the market in general.
Mutual funds provide a relatively easy way to invest. Most funds have a minimum investment of $1000. In addition, a mutual fund stands ready to buy back, or redeem, your shares at any time. This liquidity allows you to get your money when needed. There is no guarantee, however, that your shares at the time of redemption will not have decreased in value.
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Types of Mutual Funds
The types of mutual funds vary according to the fund's investment objective. A fund's investment objective will usually seek capital gains (gains from the sale of portfolio securities), income (interest and dividends earned on the portfolio securi ties) or a combination of both. While not a comprehensive list of all mutual funds, the basic types of funds are described below.
Money Market: A money market fund seeks safety of principal by investing in high quality, short-term securities. This type of fund is designed with the aim that an investor's principal should not decrease in value. There is no guarantee, how ever, that this will always be the case. A money market fund seeks to provide a regular distribution of income which is determined by short-term interest rates.
Growth: A growth fund invests primarily in the common stock of well established companies. This type of fund may invest for long-term capital gains and is not intended for an investor who seeks income.
Aggressive Growth: Like a growth fund, an aggressive growth fund will invest primarily in common stock for long-term capital gains. An aggressive growth fund may invest in the common stock of small companies, out-of-favor companies or companies in new industries. It, therefore, has a higher degree of risk than a basic growth fund.
Income: An income fund invests in either corporate, govern ment, or municipal debt securities. A debt security is an obligation which pays interest on a regular basis. Hence, this type of fund is designed for investors who desire periodic income payments. There are, however, substantial differ ences and varying degrees of risk among income funds depending on the credit quality of the debt issuer, the maturity of the debt instrument, and prevailing interest rates.
High Income: This category of income fund seeks to achieve a high degree of income by investing a material portion of its portfolio in below investment grade debt securities or junk bonds. These funds have a high degree of risk and should be purchased by investors who can incur the risk of loss of principal.
Balanced: A balanced fund, as the name implies, invests for both growth and income. The fund will invest in both equity and debt securities. A balanced fund seeks to provide long-term growth through its equity component as well as income to be generated by the portfolio's debt securities.
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Balancing Risk with Investment Goals
Do not let anyone tell you that mutual funds are free from risk. While risks vary depending on the fund, the potential danger is the same - loss of principal and income. You must determine your own risk tolerance level. This determination should be made with your investment goals in mind. Risks that may be acceptable for a long-term investor seeking capital appreciation may not be suitable for an investor seeking income and principal protection. The following chart is intended to provide you with a starting point for matching mutual fund objectives with your risk tolerance. Be aware that not every fund designed to meet one of the stated objectives will have a similar degree of risk. You should refer to the fund's prospectus to determine the risks associated with a fund.
Fund Objective/Degree of Risk Money Market/Low Growth/Medium to High Aggressive Growth/High Income/Low to Medium High Income/High Balanced/Medium
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Disclosure Documents
The Prospectus
The fund's prospectus is one of the most important docu ments to read when purchasing a mutual fund. It supplies the material information you will need to make an informed invest ment decision. Information is also available in the prospectus on certain administrative aspects of the fund, such as buying, redeeming and exchanging shares.
The Statement of Additional Information
The SAI includes information which supplements what is disclosed in the prospectus. A fund's audited financial statement and a list of its portfolio holdings are included in the SAI, as well as in the annual report (see below). Because the SAI has been legally incorporated into the prospectus, it will be assumed that you have read it. Hence, you should always ask for a copy and read the SAI before investing in a mutual fund. If you encounter any problems when requesting this document, please contact the Securities Division.
The Annual Report
The annual report is forwarded to a fund's shareholders at the end of each fiscal year. It includes the fund's audited financial statements and a list of the fund's portfolio securities. Unless otherwise included in the prospectus, a fund will include in its annual report a line graph comparing its performance to that of an appropriate broad-based securities market index, as well as a discussion of those events, strategies and techniques which affected its performance during the past fiscal year. An annual report includes material information which may not be available in other disclosure documents and, if available, should be read by a potential investor.
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Mutual Fund Sales Charges
A mutual fund which sells its shares directly to investors without paying sales commissions to broker-dealers is referred to as a no-load fund. When you invest in a no-load fund your entire investment goes into buying shares of the fund. However, because you are not paying a commission to a broker-dealer, you will not receive financial advice.
When financial advice is needed, some investors choose a load fund. A load fund pays a broker-dealer a sales commission. The amount you invest in the fund is decreased by the payment of the sales commission. Some load funds, rather than charging the sales commission at the time of the sale, charge the fee when money is taken out of the fund. This fee is referred to as a contingent deferred sales charge or a back-end load. The back -end fee will usually decrease to zero the longer an investor remains in the fund.
Another sales-related expense, which is often overlooked by investors, is the 12b-1 fee. This fee, which is disclosed in the fund's fee table, can be used by the fund for marketing, advertis ing or sales commissions. Because the 12b-1 fee is a charge against the fund on an annual basis, an investor could over the long term pay more in 12b-1 fees than would have been permis sible as a maximum front end sales load.
Many load funds offer investors the option of paying the sales load up-front, back-end or a combination of a reduced sales commission and a 12b-1 fee. These sales-related options are called classes of fund shares. You should choose the class that best matches your needs and investment time frame.
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Additional Information
If you have a problemunderstanding any aspect of your mutual fund contactthe fund directly. Most funds have a toll- free number on the front page of the prospectus for this purpose. There are also a number of private organizations which publish consumer guides which address mutual funds. For more informa tion, you may wish to contact the Investment Company Insti tute at 202-326-5872. The Division also has a brochure to help clear up any investor misconceptions concerning the sale of mutual funds and other investment products sold on bank premises. You can contact the Office of the Massachusetts Secretary of State, Securities Division for this brochure, as well as for general information concerning your mutual fund, broker -dealer or financial advisor.



WRAPUP 2-S.Korea to set up bank recapitalisation fund

2008-12-18 09:57 (UTC)

By Kim Yeon-hee and Jonathan Thatcher
SEOUL, Dec 18 (Reuters) - South Korea said on Thursday it was launching a $15 billion fund to recapitalise banks, hoping that would encourage them to lend and help the economy steer clear of a recession.
The government also promised to keep pumping liquidity into the cash-starved money market that has been squeezed by the international credit crunch, making banks wary of lending to local firms and struggling themselves to raise funds from foreign lenders.
'(The authorities) have begun to heed international investors' warnings that the domestic economy and the financial system are not as healthy as they believe,' said Kim Kyeong-won, senior vice president of leading private think-tank Samsung Economic Research Institute.
'They learned a lesson over the past two months that a series of incremental steps was not effective in this financial crisis. They are now trying to outpace the market to quell any lingering fears, as can be seen in the Bank of Korea's unprecedented rate cuts and the huge bank support plan,' he added.
The recapitalisation fund, to be launched in January, is the latest of a raft of measures by authorities to counter the global credit crisis. They have included economic stimulus, rate cuts and debt guarantees.
Regulators have demanded that banks raise their tier-1 capital ratio -- the core measure of a bank's financial strength -- to 9 percent by January from 8.3 percent now.
VOLUNTARY
'If we pump in a total of 20 trillion won into the banking sector, we estimate their BIS (Bank for International Settlements) ratio would rise by 2.6 percentage points on average,' the Financial Services Commission, a top regulator, said in a statement.
The Korea Federation of Banks said those banks unable on their own to reach 9 percent would be able to tap the 20 trillion-won ($15 billion) fund. In exchange for funds, banks would sell preferred shares and equity-type bonds.
However, Rhee Chang-yong, vice-chairman of the FSC, stressed use of the fund would be voluntary.
Direct injection of taxpayers' money into the banks would only worry foreign investors, who on average hold more than 50 percent of the country's private banks.
In any case, South Korean banks were not in such bad shape that they needed direct capital injection, unlike in many Western countries which have been forced to bail out troubled banks.
'This is not government intervention in bank management or a dilution of shares,' he told reporters.
Still, Choi Jong-won, analyst at Tong Yang Securities, said the fund would weigh on foreign investor sentiment, even if banks had no other choice but to tap the fund.
'Potential issuance of additional shares for capital increases may make some foreign investors unhappy, particularly given the fact that dividends will come out poorly as well. But what else can banks do? They've got to survive, and they need this fund in order to stay afloat,' Choi said.
The Bank of Korea plans to provide 10 trillion won for the fund. Public investors, such as pension funds, will inject an additional 8 trillion won by purchasing securities that the fund will issue. State-owned Korea Development Bank will put in the remaining 2 trillion won.
PREFERRED SHARES
Rhee added directly injecting capital into banks could prompt unsettling memories of the 1997-98 Asian financial crisis, which almost pushed South Korea into debt default and forced it to seek massive aid from the International Monetary Fund.
This week the Finance Ministry forecast economic growth would slow to 3 percent next year, although most economists say it will be lucky to reach even 2 percent. GDP growth in 2007 was 5.0 percent.
The finance ministry said to help ease the liquidity squeeze it would continue what it called aggressive open market operations such as repurchase agreements.
It said it expects local banks to be able to roll over all their external debts due in the first half of 2009, helped by government and central bank plans to supply a combined $55 billion in foreign currency liquidity to the money market.
A large chunk of that money will come from a U.S. Federal Reserve credit line of $30 billion dollars. The central bank has injected a combined $7 billion into banks via the facility so far and plans to lend another $4 billion next week.
South Korea last week also signed major currency swap deals with neighbouring Japan and China.
($1=1,324.0 Won)
(Additional reporting by Cheon Jong-woo, Seo Eun-kyung, Jungyoun Park and Yoo Choonsik, writing by Jonathan Thatcher; Editing by Neil Fullick) Keywords: FINANCIAL/KOREA
(jonathan.thatcher@reuters.com; +82 2 3704 5640; Reuters Messaging: jonathan.thatcher.reuters.com@reuters.net)




INVESTMENT OBJECTIVE
The Fund’s primary investment objective is to provide a high level of current income and current gains, with a secondary objective of long-term capital appreciation. The Fund will pursue its investment objectives by investing in a portfolio consisting primarily of high-quality, large-capitalization common stocks that are, in the view of the Fund’s Investment Manager, selling at a reasonable price in relation to their long-term earnings growth rates. The Fund will, on an ongoing and consistent basis, sell covered call options to seek to generate a reasonably steady return from option premiums. There can be no assurance that the Fund will achieve its investment objectives. The Fund will, under normal market conditions, allocate at least 80% of its total assets to an integrated investment strategy pursuant to which the Fund invests in a portfolio of equity securities and writes covered call options on a portion of the equity securities held in the Fund’s portfolio; pending investment in equity securities or as covered call options, the assets of the Fund allocated to its integrated investment strategy are held in cash or cash equivalents. (This new policy replaces the prior policy pursuant to which the Fund would allocate at least 80% of its total assets to covered calls). The Fund will invest, under normal market conditions, at least 65% of its investments in equity securities in common stocks of large capitalization issuers that meet the Fund’s selection criteria. (This new policy replaces the prior policy pursuant to which the Fund would invest at least 65% of its total assets in common stocks of large cap issuers that meet the Fund’s selection criteria).
RISKS AND OTHER CONSIDERATIONS
There can be no assurance that the Fund will achieve its investment objectives. The value of the Fund will fluctuate with the value of the underlying securities. Historically, closed-end funds often trade at a discount to their net asset value. Risk is inherent in all investing, including the loss of your entire principal. Therefore, before investing you should consider the following risks carefully.Equity Risk. Substantially all of the Fund’s assets will be invested in common stocks and (to a lesser extent) preferred equity securities, and therefore a principal risk of investing in the Fund is equity risk. Equity risk is the risk that securities held by the Fund will fall due to general market or economic conditions, perceptions regarding the industries in which the issuers of securities held by the Fund participate, and the particular circumstances and performance of particular companies whose securities the Fund holds. For example, an adverse event, such as an unfavorable earnings report, may depress the value of equity securities of an issuer held by the Fund; the price of common stock of an issuer may be particularly sensitive to general movements in the stock market; or a drop in the stock market may depress the price of most or all of the common stocks and other equity securities held by the Fund. In addition, common stock of an issuer in the Fund’s portfolio may decline in price if the issuer fails to make anticipated dividend payments because, among other reasons, the issuer of the security experiences a decline in its financial condition. Common equity securities in which the Fund will invest are structurally subordinated to preferred stocks, bonds and other debt instruments in a company’s capital structure, in terms of priority to corporate income, and therefore will be subject to greater dividend risk than preferred stocks or debt instruments of such issuers. In addition, while broad market measures of common stocks have historically generated higher average returns than fixed income securities, common stocks have also experienced significantly more volatility in those returns.A strategy of writing (selling) covered call options entails various risks. For example, the correlation between the equity securities and options markets may, at times, be imperfect and can furthermore be affected by market behavior and unforeseen events, thus causing a given transaction to not achieve its objectives. There may be times when the Fund will be required to purchase or sell equity securities to meet its obligations under the options contracts on certain options at inopportune times when it may not be beneficial to the Fund. The Fund will forego the opportunity to profit from increases in the market value of equity securities that it has written call options on, above the sum of the premium and the strike price of the option. Furthermore, the Fund’s downside protection on equity securities it has written call options on would be limited to the amount of the premium received for writing the call option and thus the Fund would be at risk for any further price declines in the stock below that level.Limitation on Option Writing Risk. The number of call options the Fund can write is limited by the number of shares of common stock the Fund holds, and further limited by the fact that call options represent 100 share lots of the underlying common stock. The Fund will not write “naked” or uncovered call options. Furthermore, the Fund’s options transactions will be subject to limitations established by each of the exchanges, boards of trade or other trading facilities on which such options are traded. These limitations govern the maximum number of options in each class which may be written or purchased by a single investor or group of investors acting in concert, regardless of whether the options are written or purchased on the same or different exchanges, boards of trade or other trading facilities or are held or written in one or more accounts or through one or more brokers. Thus, the number of options which the Fund may write or purchase may be affected by options written or purchased by other investment advisory clients of the Investment Manager. An exchange, board of trade or other trading facility may order the liquidation of positions found to be in excess of these limits, and it may impose certain other sanctions.Risks of Mid-Cap Companies. The Fund may invest in companies that meet the Fund’s growth and value criteria but whose market capitalization is considered middle sized or “mid-cap.” Mid-cap companies often are newer or less established companies than larger companies. Investments in mid-cap companies carry additional risks because earnings of these companies tend to be less predictable; they often have limited product lines, markets, distribution channels or financial resources; and the management of such companies may be dependent upon one or a few key people. The market movements of equity securities of mid-cap companies may be more abrupt or erratic than the market movements of equity securities of larger, more established companies or the stock market in general. Historically, mid-cap companies have sometimes gone through extended periods when they did not perform as well as larger companies. In addition, equity securities of mid-cap companies generally are less liquid than those of larger companies. This means that the Fund could have greater difficulty selling such securities at the time and price that the Fund would like.Income Risk. The income Common Shareholders receive from the Fund is based primarily on the premiums the Fund receives from writing options as well as the dividends and interest it earns from its investments, which can vary widely over the short- and long-term. If prevailing market interest rates drop, distribution rates of the Fund’s portfolio holdings of preferred securities and debt securities may decline which then may adversely affect the Fund’s distributions on Common Shares as well. The Fund’s income also would likely be affected adversely when prevailing short-term interest rates increase at any time during which the Fund is utilizing financial leverage.Foreign Securities Risk. The Fund may invest in foreign securities denominated in U.S. dollars. Investments in non-U.S. issuers may involve unique risks compared to investing in securities of U.S. issuers. These risks are more pronounced to the extent that the Fund invests a significant portion of its non-U.S. investments in one region or in the securities of emerging market issuers. These risks may include: less information about non-U.S. issuers or markets may be available due to less rigorous disclosure or accounting standards or regulatory practices; many non-U.S. markets are smaller, less liquid and more volatile; in a changing market, the Investment Manager may not be able to sell the Fund’s portfolio securities at times, in amounts and at prices it considers desirable; the economies of non-U.S. countries may grow at slower rates than expected or may experience downturns or recessions; economic, political and social developments may adversely affect the securities markets; and withholding and other non-U.S. taxes may decrease the Fund’s return.Industry Concentration Risk. To the extent that the Fund makes substantial investments in a single industry, the Fund will be more susceptible to adverse economic or regulatory occurrences affecting those sectors. The Fund currently intends to make significant investments in common stocks of companies in the technology sector, the financial institutions sector and the consumer and retail sector. However, if market conditions change, the Fund’s portfolio would not necessarily be so composed of stocks in these sectors, but could be composed significantly of stocks of issuers in other sectors of the market. The technology sector may include, for example, companies that rely extensively on technology, science or communications in their product development or operations. Common stocks of such companies may be more volatile than the overall stock market and may or may not move in tandem with the overall stock market. Technology, science and communications are rapidly changing fields, and stocks of these companies, especially of smaller or unseasoned companies, may be subject to more abrupt or erratic market movements than the stock market in general. There are significant competitive pressures among technology oriented companies and the products or operations of such companies may become obsolete quickly. In addition, these companies may have limited product lines, markets or financial resources, and the management of such companies may be more dependent upon one or a few key people. The financial institutions sector may include, for example, commercial banks, savings and loan associations, brokerage and investment companies, insurance companies, and consumer and industrial finance companies. The industries within the financial institutions sector are subject to extensive government regulation, which can limit both the amounts and types of loans and other financial commitments they can make, and the interest rates and fees they can charge. Profitability can be largely dependent on the availability and cost of capital funds and the rate of corporate and consumer debt defaults, and can fluctuate significantly when interest rates change. Credit losses resulting from financial difficulties of borrowers can negatively affect the financial institutions industries. Insurance companies can be subject to severe price competition. The financial institutions industries are currently undergoing relatively rapid change as existing distinctions between financial institutions segments become less clear. For example, recent business combinations have included insurance, finance, and securities brokerage under single ownership. The consumer and retail sector may include, for example, companies principally engaged in the manufacture and distribution of goods and services to consumers both domestically and internationally and in merchandising finished goods and services primarily to individual consumers. Industries within the consumer and retail sector can be significantly affected by the performance of the overall economy, interest rates, competition, consumer confidence and spending, intense competition and changes in demographics and consumer tastes.Derivatives Risk. In addition to the risks associated with its option strategies, the Fund may, but is not required or expected to any significant extent to, participate in certain derivative transactions. Such transactions entail certain execution, market, liquidity, hedging and tax risks. Participation in the options or futures markets involves investment risks and transaction costs to which the Fund would not be subject absent the use of these strategies. If the Investment Manager’s prediction of movements in the direction of the securities and interest rate markets is inaccurate, the consequences to the Fund may leave the Fund in a worse position than if it had not used such strategies.Illiquid Securities Risk. Although the Fund does not anticipate doing so to any significant extent, the Fund may invest in securities for which there is no readily available trading market or are otherwise illiquid. It may be difficult to sell such securities at a price representing the fair value and where registration is required, a considerable period may elapse between a decision to sell the securities and the time when the Fund would be permitted to sell.Fund Distribution Risk. Pursuant to its distribution policy, the Fund intends to make regular quarterly distributions on its Common Shares. In order to make such distributions, the Fund may have to sell a portion of its investment portfolio at a time when independent investment judgment may not dictate such action. In addition, the Fund’s ability to make distributions more frequently than annually from any net realized capital gains by the Fund is subject to the Fund obtaining exemptive relief from the Securities and Exchange Commission, which cannot be assured. To the extent the total quarterly distributions for a year exceed the Fund’s net investment company income and net realized capital gain for that year, the excess will generally constitute a return of capital. Such return of capital distributions generally are tax-free up to the amount of a Common Shareholder’s tax basis in the Common Shares (generally, the amount paid for the Common Shares). In addition, such excess distributions will decrease the Fund’s total assets and may increase the Fund’s expense ratio.Market Discount Risk. Whether investors will realize gains or losses upon the sale of shares of the Fund will depend upon the market price of the shares at the time of sale, which may be less or more than the Fund’s net asset value per share. Since the market price of the shares will be affected by such factors as the relative demand for and supply of the shares in the market, general market and economic conditions and other factors beyond the control of the Fund, the Fund cannot predict whether the shares will trade at, below or above net asset value or at, below or above the public offering price. Shares of closed-end funds often trade at a discount to their net asset values, and the Fund’s shares may trade at such a discount. This risk may be greater for investors expecting to sell their shares of the Fund soon after completion of the public offering. The shares of the Fund were designed primarily for long term investors, and investors in the shares should not view the Fund as a vehicle for trading purposes.Other Investment Companies. The Fund may invest up to 10% of the Fund’s total assets in securities of other open- or closed-end investment companies, including ETFs, that invest primarily in securities of the types in which the Fund may invest directly. The Fund expects that these investments will be primarily in ETFs. As a stockholder in an investment company, the Fund will bear its ratable share of that investment company’s expenses, and would remain subject to payment of the Fund’s investment management fees with respect to the assets so invested. Common Shareholders would therefore be subject to duplicative expenses to the extent the Fund invests in other investment companies. In addition, the securities of other investment companies may be leveraged and will therefore be subject to the same leverage risks.Financial Leverage. The Fund is authorized to utilize leverage through the issuance of preferred shares and/or the Fund may also borrow or issue debt securities for financial leveraging purposes and for temporary purposes such as settlement of transactions. Any such financial leverage would be limited to an amount up to 20% of the Fund’s total assets (including the proceeds of such financial leverage). Although the use of any financial leverage by the Fund may create an opportunity for increased net income, gains and capital appreciation for the Common Shares, it also results in additional risks and can magnify the effect of any losses. If the income and gains earned on securities purchased with financial leverage proceeds are greater than the cost of financial leverage, the Fund’s return will be greater than if financial leverage had not been used. Conversely, if the income or gain from the securities purchased with such proceeds does not cover the cost of financial leverage, the return to the Fund will be less than if financial leverage had not been used. Financial leverage also increases the likelihood of greater volatility of net asset value and market price of and dividends on the Common Shares than a comparable portfolio without leverage.Management Risk. The Fund is subject to management risk because it is an actively managed portfolio. In acting as the Fund’s investment manager of its portfolio securities, the Investment Manager will apply investment techniques and risk analyses in making investment decisions for the Fund, but there can be no guarantee that these will produce the desired results.Current Developments. As a result of the terrorist attacks on the World Trade Center and the Pentagon on September 11, 2001, some of the U.S. securities markets were closed for a four-day period. These terrorist attacks, the war in Iraq and its aftermath and other geopolitical events have led to, and may in the future lead to, increased short-term market volatility and may have long-term effects on U.S. and world economies and markets. Similar events in the future or other disruptions of financial markets could affect interest rates, securities exchanges, auctions, secondary trading, rating, credit risk, inflation and other factors relating to the Common Shares.



Mutual Funds, Stocks and Bonds

Now that you’re ready to invest, what type of investments are right for you? Mutual FundsMutual funds are designed to offer the individual investor diversification and professional money management, even with low investment amounts.
A mutual fund pools money from its many investors to purchase securities for the fund's portfolio. As a result, investors typically own a portion of a portfolio that includes many more investments than they could afford to purchase individually — the value of the investor's share of that portfolio increases or decreases based on the value of the investments in the portfolio.
Every mutual fund has a specific investment objective. Most mutual funds invest in stocks, bonds, cash equivalents, or a combination of the above. Within those categories, a stock fund may emphasize domestic or foreign equities or stocks from a particular industry sector. A bond fund may concentrate on investments with either long- or short-term maturities, or on government or corporate securities.
A mutual fund distributes its income and capital gains. As the fund buys and sells investments within its portfolio, it distributes any income received from stock dividends or bond interest to the shareholders along with any capital gains from the sale of securities.
Be sure to read the prospectus before investing. The prospectus tells you how the fund will invest, how you may purchase shares, how the fund will be administered, and what it will cost you in fees and other expenses.
To learn more about investing in mutual funds, visit our Mutual Fund Center. StocksStocks can help you build long-term growth into your overall financial plan. History has repeatedly demonstrated that stocks, as an asset class, have outperformed every other type of investment over long periods of time.
Stock represents an ownership or equity stake in a corporation. If you are a stockholder, you own a proportionate share in the corporation's assets and you may be paid a share of the company's earnings in the form of dividends.
Stocks are considered to be a riskier investment than bonds or cash. Stock prices tend to fluctuate more sharply — both up and down — than other types of asset classes.
Be sure to research a stock before investing. You should understand its products or services, its market, as well as whether it has a sound balance sheet, cash-flow management, and competent directors and managers. You should also consider analysts' projected earnings estimates.
Margin borrowing is available. Buying stock on margin allows you to extend the financial reach of your brokerage account by borrowing money from Wells Fargo Investments in order to purchase the stock. Margin privileges are subject to approval. Margin borrowing involves additional risks and is not suitable for all investors. Please read the Margin Risk Disclosure Statement carefully. To view our Margin Rates and to learn more about margin borrowing, visit Margin Accounts.
To learn more about investing in stocks, visit our Stock Center. BondsCorporations, governments and municipalities issue bonds to raise funds, and in return they typically pay the bond owners a fixed interest rate. In this way, a bond is like a loan.
Bonds may provide a regular income stream or diversify a portfolio. Bonds are fixed income investments — most pay periodic interest and principal at maturity.
Interest rates may be the most significant factor affecting a bond's value. When interest rates fall, the value of existing bonds rise because their fixed-interest rates are more attractive in the market than the rates for new issues. Similarly, when interest rates rise, the value of existing bonds with lower, fixed-interest rates tend to fall.
Inflation may erode the purchasing power of interest income. Generally, bonds with longer maturities are more sensitive to inflation than bonds with shorter maturities.
Economic conditions may cause bond values — particularly corporate bonds — to fluctuate. An economic change that adversely affects a company’s business may reduce the ability of a company to make interest or principal payments.




Bond Center
Bonds can provide income and portfolio stabilityAs a part of a diversified portfolio, bonds can help you manage market fluctuations and generate income. Wells Fargo Investments offers a full array of bonds including corporate bonds, municipal bonds, Treasuries, and other fixed-income investments. As a brokerage customer, when you sign on to your account you can access a large fixed-income inventory plus advanced tools and calculators through the Bond Center. Our experienced financial professionals can also assist you with adding bonds to your portfolio.



Key Features of BondsAs a part of a diversified portfolio, bonds can help you manage market fluctuations and generate income. The key features of the bonds generally available to individual investors are as follows:
Coupon rate
Credit quality of the issuer
Whether the bond is callable at certain dates or may be prepaid prior to the maturity date
Length of time between the date the bond is purchased and its maturity date
Whether the interest paid is fully taxable
Types of BondsBonds are generally categorized by the types of entities that issue them. Four common types of bonds include: U.S. Government Securities, Mortgage Backed Securities, Municipal Bonds, and Corporate Bonds. U.S. Government SecuritiesU.S. Government bonds are issued by the U.S. Department of Treasury. These bonds obligate the government to pay the bondholder a specified sum of money, usually at specific intervals, and to repay the principal amount of the loan at the maturity date. You can purchase U.S. Treasury securities through a Wells Fargo Investments Brokerage account, through a UIT, or even directly online from the Department of Treasury's Internet site. U.S. Treasury securities include:
U.S. Treasury bill or T-Bill
Negotiable debt obligation issued by the U.S. Government and backed by its full faith and credit
Issued in denominations of $1000 although brokerage firms may impose a minimum purchase order
Maturity dates from 90 days to 1 year
Interest is generally exempt from state and local income taxes
Interest is paid at maturity and is the difference between the cost to purchase the bill and the face value received at maturity
U.S. Treasury note
Negotiable debt obligation issued by the U.S. Government and backed by its full faith and credit
Issued in denominations of $1000 although brokerage firms may impose a minimum purchase order
Maturity dates range from 2 to 10 years
Interest is paid semi-annually
U.S. Treasury bond
Negotiable, coupon-bearing debt obligation issued by the U.S. Government and backed by its full faith and credit
Issued in denominations of $1000 although brokerage firms may impose a minimum purchase order
Maturity dates from 10 to 30 years
Interest payments are exempt from state and local taxes
Interest paid semi-annually
U.S. government issued zero-coupon bond or accrual bond
Issue at a discount that varies depending on the length of the maturity
Pays no interest, instead, pays a higher par value at maturity than the face value at issue
Taxes due annually on accrued interest (except with tax-exempt municipal zeros)
Savings bond or U.S. Savings Bond
Registered, non-callable, non-transferable bond issued by the U.S. Government and backed by its full faith and credit
Face value ranges from $50 to $10,000
Issued in 3 types: Series EE, Series HH, Series I
Interest payments are exempt from state and local taxes

Mortgage-Backed SecuritiesA mortgage-backed security is a security created by pooling mortgage debt and selling it as individual bond securities. Mortgage securities tend to be higher-risk than other types of bonds and are often priced to achieve a higher yield as a result. Principal and interest payments are paid periodically, unlike other types of bonds that pay the principal upon maturity. Prepayment risk is a special consideration of mortgage securities. The most commonly sold mortgage-backed securities are issued by the entities Ginnie Mae and Freddie Mac.
Government National Mortgage Association (GNMA or Ginnie Mae): A government-owned agency that buys mortgages from lending institutions, securitizes them, and then sells them to investors. Guaranteed against default risk (although not other interest-rates or prepayment risk) by the full faith and credit of the U.S. government.
Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac): A government-chartered corporation which buys qualified mortgage loans from the financial institutions that originate them, securitizes the loans, and distributes the securities through the dealer community. The securities are not backed by the U.S. government.

Municipal Bonds State or local governments issue municipal bonds to fund civic projects. The potential advantage of investing in "munis" is that bonds deemed to be public purpose bonds typically pay interest free from federal and/or state income tax. There are some exceptions involving alternative minimum taxes. In addition, any capital gain earned from the sale of a municipal bond is fully taxable and may in fact be taxed as income if the bond was purchased at a steep enough discount or is sold for a gain prior to its maturity. You will typically receive a lower interest rate on tax-free bonds since you are benefiting from the tax advantage. It is important to compare your after-tax returns to see if, given your tax situation, you might not be better off with a higher interest, taxable bond. When determining whether or not to purchase a municipal bond, you should calculate the taxable equivalent yield. This is the yield needed on a taxable investment in order to match the tax-free return offered on a municipal bond. Taxable Equivalent Yield = Tax-exempt yield divided by (1 - your marginal tax rate) For example, if you are in the 33% tax bracket and earn 5.5% on your tax-exempt municipal bond, 8.2% is the equivalent yield on a taxable investment. As noted above, if the interest earned is subject to the alternative minimum tax or if the bond was purchased at a steep enough discount to trigger a de minimus tax, the tax equivalent yield calculation will overstate your return. This calculation does not include any benefit for investors who reside in states that exclude interest paid from municipal bonds from taxation. Tax-free municipal bonds may make less sense for people in lower tax brackets since the tax savings is only as great as the investor's marginal tax rate. It is also important to understand that unlike U.S. Government bonds — which are considered to have almost no chance of default — municipal bonds bear varying degrees of default risk. Corporate BondsCorporate bonds are debt instruments issued by companies to raise capital. Corporate bonds tend to be more risky than government bonds because they are backed by individual corporations and not by the full faith and credit of the U.S. Government. By the same token, because you incur greater risk with a corporate bond, corporate bonds have generally carried a higher yield than government bond issues with similar maturity dates. Corporate bonds commonly have the following features:
Par value of $1,000
Minimum purchase is typically $5,000
Corporate bonds are subject to local, state, and federal taxation
Credit ratings and what they mean Rating services like Standard & Poor's and Moody's assign a corporation's bond ratings based on their perception of whether a debt issuer will be able to meet scheduled interest and principal repayments. Typically, AAA has the lowest degree of risk, and D has the highest degree of risk.
Moody's
Standard & Poor's
What the Rating Means
Aaa
AAA
Highest quality
Aa
AA
High quality
A
A
Upper-medium quality
Baa
BBB
Medium quality
Ba, B
BB, B
Below investment grade
Caa, Ca
CCC, CC
Highly speculative
C
C
Typically bonds that are paying no interest
--
D
In default, interest and/or principal has not been paid
Purchase bonds through Wells Fargo InvestmentsWells Fargo Investments offers a full suite of brokerage accounts through which you can purchase a complete array of bonds including corporate bonds, municipal bonds, Treasuries, and other fixed-income investments, as well as stocks, bonds and more. Whether you wish to invest independently or with the advice of a Financial Consultant we have an account that’s right for you. Compare Brokerage Accounts or call 866-243-0931 to speak with an experienced financial professional.


Investors can purchase individual bonds through brokerage firms. New issue US Treasury Securities can be purchased at auction either through brokerage firms or directly with the Federal Reserve. Most bonds are issued in increments of $1000 face amount (value at maturity) and many have minimums that must be purchased. The price you pay for a bond can be more (premium bonds) or less (discount bonds) than their value at maturity. Bonds should be compared based on their yield to maturity which takes into account their coupon, price, maturity and frequency of interest payments.

Pros
Most bonds pay periodic interest and principal at maturity. The interest on most municipal bonds is exempt from federal income taxes and in many cases state income taxes as well.
By purchasing individual bonds you can create a portfolio that meets your individual needs. You can purchase bonds that will mature when you need the money, i.e. college tuition payments, retirement supplements etc.

Cons
Unless you purchase an insured bond, you are subject to default risk. However, by purchasing bonds with quality ratings and by diversifying your bond investment into a variety of bonds, you can minimize your exposure to default risk.
Reinvestment risk is always a factor when buying bonds. As interest rates fall, bonds may be called and your principal returned. You may not be able to reinvest your proceeds in bonds with a similar coupon and your return could be lower.



Interest rates may be the most significant factor affecting a bond's value. When interest rates fall, the value of existing bonds rises because their interest "coupons" are more attractive than the coupons for new issues. Similarly, when interest rates rise, the value of existing bonds tends to fall.

Inflation may influence the direction of interest rates and erode the purchasing power of interest income. A change in the outlook for inflation may also affect bond values — even if interest rates do not move. Generally, bonds with longer maturities are more sensitive to inflation than bonds with shorter maturities.

Economic conditions may cause bond values — particularly those issued by corporations — to fluctuate. In addition to affecting inflation and interest rates, an economic change may influence the ability of a company to make interest or principal payments. Even if the company does not default, the value of a lower-rated bond may fall based on the perception that the issuer may be susceptible to default. An improving economy may thus raise the values of corporate bonds, while a weakening economy may cause corporate bond values to fall.


Interest rates may be the most significant factor affecting a bond's value. When interest rates fall, the value of existing bonds rises because their interest "coupons" are more attractive than the coupons for new issues. Similarly, when interest rates rise, the value of existing bonds tends to fall.

Inflation may influence the direction of interest rates and erode the purchasing power of interest income. A change in the outlook for inflation may also affect bond values — even if interest rates do not move. Generally, bonds with longer maturities are more sensitive to inflation than bonds with shorter maturities.

Economic conditions may cause bond values — particularly those issued by corporations — to fluctuate. In addition to affecting inflation and interest rates, an economic change may influence the ability of a company to make interest or principal payments. Even if the company does not default, the value of a lower-rated bond may fall based on the perception that the issuer may be susceptible to default. An improving economy may thus raise the values of corporate bonds, while a weakening economy may cause corporate bond values to fall.
https://www.wellsfargo.com/investing/bonds/influences


WRAPUP 2-S.Korea to set up bank recapitalisation fund

843 words
18 December 2008
9:42 AM GMT
AFX Asia
English
(c) 2008, AFX Asia. All rights reserved.
By Kim Yeon-hee and Jonathan Thatcher SEOUL, Dec 18 (Reuters) - South Korea said on Thursday it was launching a $15 billion fund to recapitalise banks, hoping that would encourage them to lend and help the economy steer clear of a recession. The government also promised to keep pumping liquidity into the cash-starved money market that has been squeezed by the international credit crunch, making banks wary of lending to local firms and struggling themselves to raise funds from foreign lenders. "(The authorities) have begun to heed international investors' warnings that the domestic economy and the financial system are not as healthy as they believe," said Kim Kyeong-won, senior vice president of leading private think-tank Samsung Economic Research Institute. "They learned a lesson over the past two months that a series of incremental steps was not effective in this financial crisis.
They are now trying to outpace the market to quell any lingering fears, as can be seen in the Bank of Korea's unprecedented rate cuts and the huge bank support plan," he added. The recapitalisation fund, to be launched in January, is the latest of a raft of measures by authorities to counter the global credit crisis. They have included economic stimulus, rate cuts and debt guarantees. Regulators have demanded that banks raise their tier-1 capital ratio -- the core measure of a bank's financial strength -- to 9 percent by January from 8.3 percent now. VOLUNTARY "If we pump in a total of 20 trillion won into the banking sector, we estimate their BIS (Bank for International Settlements) ratio would rise by 2.6 percentage points on average," the Financial Services Commission, a top regulator, said in a statement. The Korea Federation of Banks said those banks unable on their own to reach 9 percent would be able to tap the 20 trillion-won ($15 billion) fund. In exchange for funds, banks would sell preferred shares and equity-type bonds. However, Rhee Chang-yong, vice-chairman of the FSC, stressed use of the fund would be voluntary. Direct injection of taxpayers' money into the banks would only worry foreign investors, who on average hold more than 50 percent of the country's private banks. In any case, South Korean banks were not in such bad shape that they needed direct capital injection, unlike in many Western countries which have been forced to bail out troubled banks. "This is not government intervention in bank management or a dilution of shares," he told reporters. Still, Choi Jong-won, analyst at Tong Yang Securities, said the fund would weigh on foreign investor sentiment, even if banks had no other choice but to tap the fund. "Potential issuance of additional shares for capital increases may make some foreign investors unhappy, particularly given the fact that dividends will come out poorly as well. But what else can banks do? They've got to survive, and they need this fund in order to stay afloat," Choi said. The Bank of Korea plans to provide 10 trillion won for the fund. Public investors, such as pension funds, will inject an additional 8 trillion won by purchasing securities that the fund will issue. State-owned Korea Development Bank will put in the remaining 2 trillion won. PREFERRED SHARES Rhee added directly injecting capital into banks could prompt unsettling memories of the 1997-98 Asian financial crisis, which almost pushed South Korea into debt default and forced it to seek massive aid from the International Monetary Fund. This week the Finance Ministry forecast economic growth would slow to 3 percent next year, although most economists say it will be lucky to reach even 2 percent. GDP growth in 2007 was 5.0 percent. The finance ministry said to help ease the liquidity squeeze it would continue what it called aggressive open market operations such as repurchase agreements. It said it expects local banks to be able to roll over all their external debts due in the first half of 2009, helped by government and central bank plans to supply a combined $55 billion in foreign currency liquidity to the money market. A large chunk of that money will come from a U.S. Federal Reserve credit line of $30 billion dollars. The central bank has injected a combined $7 billion into banks via the facility so far and plans to lend another $4 billion next week. South Korea last week also signed major currency swap deals with neighbouring Japan and China. ($1=1,324.0 Won) (Additional reporting by Cheon Jong-woo, Seo Eun-kyung, Jungyoun Park and Yoo Choonsik, writing by Jonathan Thatcher; Editing by Neil Fullick) Keywords: FINANCIAL/KOREA (jonathan.thatcher@reuters.com; +82 2 3704 5640; Reuters Messaging: jonathan.thatcher.reuters.com@reuters.net)



S.Korea to form $15 bln fund to recapitalise banks
(Adds details from statement)
(for a factbox, please click [ID:nSEO246419])
SEOUL, Dec 18 (Reuters) - South Korea will launch a 20 trillion won ($15.1 billion) fund in January to help banks replenish capital and encourage them to lend into the cash-strapped economy, the top regulator said on Thursday.
The fund launch comes on the heels of a string of base rate cuts by the Bank of Korea as the country battles to evade the recession hitting other major economies, while banks, led by Kookmin and Shinhan, are bustling to boost their capital bases.
"Our 2009 financial policy will focus on helping and protecting the real economy," Seungtae Lim, secretary general at the regulatory Financial Services Commission, told a briefing.
"For banks to provide money to companies on a steady basis, we need to lessen the burden on banks."
The Financial Services Commission said in a statement the Bank of Korea would lend 10 trillion won to the Bank Recapitalisation Fund, subject to approval by its monetary policy committee.
Banks can voluntarily tap the fund through the sale of new preferred shares and equity-type bonds. Public investors will inject an additional 8 trillion won by purchasing securities it issues, with the state-owned Korea Development Bank set to pump in the remaining 2 trillion won.
Lim said that banks were able to resort to the fund that would buy mainly preferred shares and equity-type bonds temporarily in 2009 to help improve their tier-1 capital.
Tier-1 capital is the core measure of a bank's financial strength, and excludes debt-like instruments such as subordinated debt.
"If we pump in a total of 20 trillion won into the banking sector, we estimate their BIS ratio would rise by 2.6 percentage points on average," the FSC said in the statement.
BIS stands for the Bank for International Settlements.
In return for support from the new fund, banks will be required to step up cost-cutting and restructuring and increase support to the real economy, but should not use the funds for unnecessary asset expansion such as mergers and acquisitions.
In November, South Korean banks pledged to raise their capital ratios to 11-12 percent mostly via the sale of subordinated debt, from an average 10.79 percent at end-September, which marked the lowest in 7-½ years.
($1=1324.0 Won)
(Reporting by Kim Yeon-hee; Editing by Jonathan Thatcher and Keiron Henderson)
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The government is poised to lift real estate restrictions on transactions of apartments developed in private housing lots. The Ministry of Land, Transport and Maritime Affairs also plans to eliminate price caps for apartments built by private constructors and remove three districts in Seoul’s Gangnam area from the list of speculation-prone zones. With the legislation, apartment owners will no longer be subject to waiting periods before they are allowed to sell their apartments. However, restrictions on transactions and price caps will remain in place in areas developed by state-run constrictors. Currently, owners of apartments in public development regions are banned from selling their apartments for one year in the provinces and up to seven years in the capital. The ministry is set to submit its revisions to related bills to the National Assembly in February.



Foreign investors warming up to Korean stocks
Foreign investors recorded net purchases in the Korean stock market for three consecutive weeks for the first time since March. Eugene Securities says foreign investors’ jitters have considerably eased thanks to strong pump priming measures announced by world governments, including sharp key interest rate cuts in the United States and Europe.


President Lee Myung-bak says a comprehensive restructuring of both public and private sectors is necessary if the nation hopes to drag itself out of the recession. On the first anniversary of his presidential win on Friday, he visited Incheon Port and a GM Daewoo auto plant in Bupyeong. There he said that only those countries that commit to a complete overhaul of their domestic institutions will be able to survive. He said that the unprecedented current financial crisis calls for extraordinary measures to ensure that all parties involved are able to coexist, even if it means the parties must be willing to make sacrifices. He said maintaining jobs is just as important as creating new ones and that the previous practices labor unions and management have used to try to resolve their differences will get them nowhere. He called for increased economic competition, enhanced labor relations outside the box thinking, and sacrifices on behalf of all.


Eighteen companies have been delisted from the domestic bourse this year as of Friday, up from eleven last year. The Financial Supervisory Service says 17 were delisted from the tech-heavy KOSDAQ and one from the securities market. Of the 18, four had suffered capital erosion while five were delisted after law firms determined the companies were insolvent. The rise in delisted firms is attributed to lower profits from the economic downturn and difficulty in securing capital.


Korea's financial authorities are preparing to buy mortgage-backed securities and subordinated bonds from local banks to help ease their financial stress. The state-owned Korea Housing Finance Corp., at the government's request, is moving to purchase mortgage-backed securities from commercial banks to help boost their capital adequacy ratios. "We have asked the Bank of Korea to include KHFC-issued bonds in its repurchase agreement operations to raise the funds needed for the purchase of mortgage-backed securities," the state-owned company said. It plans to by buying back commercial banks' "Bogeumjari" - special long-term, fixed-rate mortgages provided by the KHFC and sold by local banks. It could be expanded to include regular mortgage assets at banks, KHFC officials said. By handing over the risky mortgage assets to the KHFC, local banks would be able to raise the so-called BIS ratios, which have fallen amid the global credit crunch. BIS stands for the Bank for International Settlements. A key yardstick of a bank's financial strength, the BIS ratio is the percentage of its capital used to provide risk-weighted credit. Deterioration in these capital adequacy ratios typically makes lenders reluctant to extend loans to riskier borrowers, such as small businesses. Korea's 18 commercial banks saw their average BIS ratio drop to 10.79 percent at the end of September from 11.36 percent at the end of June. Local authorities recommend lenders to keep their ratios at 10 percent or higher to be considered healthy. To shore up the banks, the BOK may buy subordinated bonds issued by commercial banks as part of its open market operations. Subordinated bond are paid back after other debts are settled, should a company fall into receivership or be closed. The central bank last month broadened the type of bonds it will accept as collateral in money market operations to include bank bonds and special bonds, a move aimed at giving local lenders access to more funding. In the first of such operations, it bought 756.4 billion won ($560.7 million) worth of bonds issued by local banks Tuesday. "The 'bank bonds' do not exclude subordinated notes. So if an institution put its subordinated debt on offer, we can buy them," an official at the BOK said. On Tuesday, Fitch Ratings revised down the rating outlooks for Korean financial institutions to "negative" from "stable," after cutting Korea's sovereign rating a notch to "negative." (Source: The Korea Herald)



South Korea’s central bank said Wednesday it bought 1.1 trillion won worth of debt sold by banks and other state-run agencies through repurchase agreement deals in a bid to help ease a credit crunch. The central bank purchased 1.05 trillion won in bank bonds and 68.4 billion won in other debt, the BOK said, adding that the combined purchase of such bonds reached 3.81 trillion won as of Tuesday. On Monday, the central bank said it would pump a combined 6.5 trillion won in liquidity into the financial system this week by buying longer-dated repurchase agreement deals. As part of such a move, the BOK held an auction for 91-day repos on Tuesday to supply 2 trillion won. A repurchase agreement is a deal whereby one party sells the other security at a specified price with a commitment to buy the security back at a later date. It is the central bank’s main method of releasing liquidity into the market in a credit crunch and siphoning off excess liquidity.
In late October, the BOK decided to include bank bonds and some special debts as collateral for its open market operations. On Thursday, it also decided to allow an additional 12 brokerage houses to participate in its repurchase agreement operations to swiftly provide liquidity to the financial system.


· There'll be collateral damage.. (출처: 웹검색 예문)
부수적인 피해가 따를 거야
· They include cutting the property holding tax on senior citizens who use their homes as collateral for bank loans. (출처: The Korea Herald)
여기에는 주택을 은행대출의 담보로 이용하는 노년층에 대한 부동산 보유세 인하가 포함되어 있다.
· Executives including Kwak and union leaders put up their assets as collateral to borrow money and within after he took charge the company was able to return to the black. (출처: The Korea Herald)
곽 사장을 포함한 회사 간부와 노조 지도부는 자신들의 재산을 담보로 은행에서 대출을 받았고 사장 취임 후 얼마 안가 회사는 흑자로 돌아설 수 있었다.
· The total value of outstanding mortgages rose in January by 800 billion won as many people sought to use their new homes as collateral for more loans during the moving season, data from Financial Supervisory Service showed yesterday. (출처: The Korea Herald)
이사철을 맞아 새로 산 집을 담보로 대출을 얻으려는 사람이 늘어남에 따라 1월에 주택담보대출 총액이 8,000억원 늘어난 것으로 어제 금융감독원 자료에 나타났다.
· But unsecured loans will continue to decrease because we have tightened the screening policy for loans without collateral. (출처: The Korea Herald)
그리고 무담보 대출에 대한 심사를 강화하고 있기 때문에 무담보 대출은 계속 감소할 것입니다”라고 말했다.
· The credit guarantee fund said it would simplify the guarantee screening process for the loans, while not asking borrowers to provide facilities and machinery, purchased via the loans, as collateral. (출처: The Korea Herald)
기술신보는 대출을 위한 보증심사과정을 간소화하고 대출금으로 마련한 시설이나 기계의 담보 제공을 차입자에게 요구하지 않을 것이라고 말했다.
· We are increasing loans backed by collateral, a Samsung Life Insurance official noted. (출처: The Korea Herald)
삼성생명 관계자는 “우리는 담보 대출을 늘리고 있습니다.
· Given that only 56 percent of housing loans are backed by housing collateral, loan repayment burden will not be huge unless housing prices drop to an unprecedented level, said Lee Jae-hoon, a senior economist at Samsung Economic Research Institute. (출처: The Korea Herald)
가계대출의 56퍼센트만이 주택담보대출이기 때문에 “주택가격이 유례가 없는 수준까지 떨어지지 않는 한 대출금 상환부담은 크지 않을 것”이라고 이재훈 삼성경제연구소 선임연구원이 말했다.
· I just want you to put up collateral for a loan. (출처: 동아 프라임 한영사전)
나한테 돈을 빌리려면 담보만 하나 설정해 주면 된다구
· They like to keep collateral. (출처: 웹검색 예문)
그들은 담보로 잡고 있길 좋아해요
· They pledged their assets as collateral. (출처: BBI Word Combi)
그들은 자신들의 재산을 담보물로 저당 잡혔다.
· Yesterday it questioned nine Woori Bank officials who were purportedly involved in giving $6.2 million in loans to the railroad authority without proper collateral pay as a deposit in the oil exploration deal. (출처: The Korea Herald)
어제 검찰은 충분한 담보도 없이 유전개발 사업의 계약금으로 철도공사에 620만달러를 대출해준 9명의 우리은행 관계자들을 심문했다.
· Cash-tight companies that are able to prove their overall financial health will be entitled to up to 500 million won in loans without having to put up collateral. (출처: The Korea Herald)
자금상 어려움을 겪고 있는 수출 중소기업들은 수출 이행능력과 거래의 안전성을 인정받으면 최고 5억원까지 무담보로 신용대출을 받을 수 있다.
· However, the envisioned merger has been mired in controversy over Leading Investment`s method of acquiring Bridge shares through an leveraged buyout, which refers to the acquisition of a company or controlling interest in a company with money borrowed using the latter`s property as collateral. (출처: The Korea Herald)
그러나 리딩투자가 브릿지증권의 지분을 인수하는 방법이 피인수회사의 자산을 담보로 차입한 돈으로 그 회사나 그 회사의 지배지분을 인수하는 방법을 의미하는 차입인수라는 점에서 논란이 생겨 합병이 곤경에 빠졌다.
· They have already received shares in Samsung Life as collateral for debt owed by now-defunct Samsung Motor. (출처: The Korea Herald)
이들은 지금은 없어진 삼성자동차의 채무에 대한 담보로 삼성생명의 주식을 이미 받았다.
· The fact that most SME loans are backed by collateral, however, mitigates these concerns, S&P added. (출처: The Korea Herald)
그러나 또 대부분의 중소기업 여신에도 담보가 설정돼 있어 은행권의 충당금 부담을 다소 완화시키고 있다고 덧붙였다.
· In August 1999, Samsung Group Chairman Lee Kun-hee pledged the shares of the insurer to creditors as collateral to pay back Samsung Motor`s unpaid loan of 2.45 trillion won. (출처: The Korea Herald)
1999년 8월 이건희 삼성그룹 회장은 삼성생명의 주식을 2조4500억에 해당하는 삼성자동차의 미지급 부채를 상환하기 위한 담보로 채권단에 제공하기로 약속했다.
· Samsung Card said it will initially borrow $200 million at the one-month London Inter-Bank Offered Rate (Libor) plus 0.5 percentage point with two-year maturity, using auto receivables as collateral. (출처: The Korea Herald)
삼성카드는 먼저 자동차 할부금융 채권을 담보로 제공하고 2억불을 1개월짜리 런던은행간금리(Libor) 플러스 0.5퍼센트로 2년간 차입할 것이라고 말했다.
· The FSS will advise local financial institutions to extend their loans to small businesses based on the credit rating system without collaterals, he said. (출처: The Korea Herald)
신용등급이 우량한 기업에 대해서는 원칙적으로 담보 없이 신용여신을 취급하도록 금융회사를 지도하겠다고 그는 말했다.
· During the moving period, many purchase new houses and that translates into more new collaterals for mortgage loans, said Sung Byung-soo, analyst at Kyobo Securities. (출처: The Korea Herald)
이사철이 되면 새로 집을 사는 사람들이 늘어나는데 그것은 곧 주택담보대출을 받기 위한 담보가 늘어난다는 의미가 된다”고 교보증권에 애널리스트로 있는 성병수씨가 말했다.
The Financial Services Commission told President Lee that a W 20 trillion fund will be created to bolster the capital reserves of major banks in Korea. The FSC also decided to ease accounting standards for business, allowing them to re-evaluate their assets to prevent companies from shifting into the red due to the weak won. The FSC said the Capital Expansion Fund will be created with the BOK pitching in 10 trillion won, the state-run KDB 2 trillion won and the remaining 8 trillion won coming from institutional and ordinary investors. The FSC plans to use the fund to bolster capital reserves of banks by purchasing their preferred shares, hybrid debt and subordinated bonds. If the entire 20 trillion won is used, the BIS capital adequacy ratios of Korea’s major banks are expected to rise 2.6 percentage points from the end of September to around 13 percent.
In a separate move, the Korea Housing Financial Corporation plans to help bolster BIS capital adequacy ratios at banks by purchasing 7 trillion won worth of mortgage-backed securities, while the Korea Asset Management Corporation will buy 3 trillion won worth of non-performing loans.

W20 Trillion Promised to Bolster Banks
The Financial Services Commission told President Lee Myung-bak on Thursday that a W20 trillion fund will be created to bolster the capital reserves of major banks in Korea (US$1=W1,291). The FSC also decided to ease accounting standards for businesses, allowing them to re-evaluate their assets to prevent companies from shifting into the red due to the weak won.
The FSC said the Capital Expansion Fund will be created with the Bank of Korea pitching in W10 trillion, the state-run Korea Development Bank W2 trillion and the remaining W8 trillion coming from institutional and ordinary investors.
The FSC plans to use the fund to bolster capital reserves of banks by purchasing their preferred shares, hybrid debt and subordinated bonds. If the entire W20 trillion is used, the BIS capital adequacy ratios of Korea's major banks are expected to rise 2.6 percentage points from the end of September to around 13 percent.
In a separate move, the Korea Housing Financial Corporation plans to help bolster BIS capital adequacy ratios at banks by purchasing W7 trillion worth of mortgage-backed securities, while the Korea Asset Management Corporation will buy W3 trillion worth of non-performing loans.
The FSC said it will allow companies to re-evaluate their assets by recalculating the value of their real estate and machinery according to market rates rather than according to the price they paid for them. The measure is designed to help businesses produce better account settlements at the end of the year. A similar mechanism was introduced for a limited period at the height of the Asian financial crisis in late 1998.
Kwon Hyuk-Se, a member of the standing committee at the Securities & Futures Commission, said most companies are facing a crisis where they will have to settle their account books posting deficits this year due to the weak won even though they performed well. "The measure is designed to keep businesses from losing credit lines with banks due to their deficit accounts, while staying within the boundaries of international accounting standards."
(englishnews@chosun.com )