South Korea's largest credit-card issuer, LG Card Co, said customers could withdraw cash again later yesterday after creditors agreed to extend emergency loans, averting a liquidity crunch that threatened South Korea's financial system. \nLG Card was forced to suspend cash advances over the weekend because of its liquidity crunch, raising the specter of a spiralling series of defaults as many South Koreans use their credit cards to pay bills and service other credit card debts. \nLG Card has 14 million customers, almost a third of South Korea's population. \n"We will be able to resume cash-advance services in the afternoon," said a spokesman for LG Card. \nWoori Bank and other lenders agreed late on Sunday to provide 2 trillion won (US$1.68 billion) of fresh loans and to roll over LG's outstanding debt for one year, helping avert its insolvency. \nBut they warned they could write down LG family stakes in LG Card and sell other collateral if the LG Group parent failed to turn around the card firm. \nThey also said a debt-to-equity swap and a sale of LG Card to strategic investors was possible if trouble persisted. \nAnalysts said the loans had not resolved LG Card's problems. \n"We think this liquidity support package may only be able to stabilize rather than resolve LG Card's liquidity situation," said Philippa Rogers, an analyst at Goldman Sachs. "We think LG Card needs to find a strategic investor." \n"Despite the emergency financial aid, the company is at a very critical point," said Park Seok-hyun, an analyst at Kyobo Securities. \nThe card industry is struggling to cope with the aftermath of a credit boom that has left consumers unable to repay loans and card issuers with piles of bad debt. \n"This is a necessary step to not only prevent any bigger turmoil in [the] financial system, but also help out the stabilization of credit-card issuers given a significant squeeze in credit markets for credit cards seen over the recent months," said Yun Seok, analyst at Credit Suisse First Boston. \nCredit card firms' problems came to a head in March after an accounting scandal at a conglomerate scared investors off lower-quality securities, making it difficult for card issuers to roll over bonds issued to finance their lending. \nSouth Korean adults carry more than three credit cards each on average, encouraged by government tax breaks aimed at reviving domestic spending and ensuring transparent tax collection. \nLG Card had faced a default on its debts because its lenders and its parent LG Group, South Korea's second-largest conglomerate, disagreed over collateral the group had originally offered in return for the bailout. \nAlready, one won in every nine owed on a credit card was at least one month overdue at the end of August. Overdue loans at eight credit-card firms stood at 8.6 trillion won (US$7.20 billion) at the end of August, 11 percent of total credit card loans. \n"I was startled to find I could not use my LG Card to withdraw cash to buy a present for a friend," Jang Eun-ju, a teacher living in a posh neighborhood in southern Seoul. "I won't be carrying that card any more."
The US Department of State yesterday criticized Beijing over its misrepresentation of the US’ “one China” policy in the latest diplomatic salvo between the two countries over a bid by Taiwan to regain its observer status at the World Health Assembly, the decisionmaking body of the WHO. “The PRC [People’s Republic of China] continues to publicly misrepresent U.S. policy,” Department of State spokesman Ned Price wrote on Twitter. “The United States does not subscribe to the PRC’s ‘one China principle’ — we remain committed to our longstanding, bipartisan one China policy, guided by the Taiwan Relations Act, Three Joint Communiques, and
FATES LINKED: The US president said that sanctions on Russia over Ukraine must exact a ‘long-term price,’ because otherwise ‘what signal does that send to China?’ US President Joe Biden yesterday vowed that US forces would defend Taiwan militarily in the event of a Chinese attack in his strongest statement to date on the issue. Beijing is already “flirting with danger,” Biden said following talks with Japanese Prime Minister Fumio Kishida in Tokyo, in which the pair agreed to monitor Chinese naval activity and joint Chinese-Russian exercises. Asked if Washington was willing to get involved militarily to defend Taiwan, he replied: “Yes.” “That’s the commitment we made,” Biden said. “We agreed with the ‘one China’ policy, we signed on to it ... but the idea that it can be
INFORMATION LEAKED: Documents from Xinjiang purportedly showed top leaders in Beijing calling for a forceful crackdown and even orders to shoot to kill Chinese President Xi Jinping (習近平) yesterday held a videoconference with UN High Commissioner for Human Rights Michelle Bachelet as she visited Xinjiang during a mission overshadowed by fresh allegations of Uighur abuses and fears she is being used as a public relations tool. The Chinese Communist Party (CCP) has been accused of detaining more than 1 million Uighurs and other Muslim minorities in the region as part of a years-long crackdown the US and lawmakers in other Western nations have labeled a “genocide.” China denies the allegations. Bachelet was expected to visit the cities of Urumqi and Kashgar on a six-day tour. The US
SUBTLE? While Biden said the US policy of ‘strategic ambiguity’ on Taiwan had not changed, the group targeted China and Russia without naming them Leaders of Australia, India, Japan and the US yesterday warned against attempts to “change the status quo by force,” as concerns grow about whether China could invade Taiwan. The issue of Taiwan loomed over a leadership meeting in Tokyo of the Quadrilateral Security Dialogue (Quad) nations — the US, Japan, Australia and India — who stressed their determination to ensure a free and open Indo-Pacific region in the face of an increasingly assertive China, although Japanese Prime Minister Fumio Kishida said the group was not targeting any one country. The four leaders said in a joint statement issued after their talks
RSS