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.
LG 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.
LG Card has 14 million customers, almost a third of South Korea's population.
"We will be able to resume cash-advance services in the afternoon," said a spokesman for LG Card.
Woori 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.
But 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.
They also said a debt-to-equity swap and a sale of LG Card to strategic investors was possible if trouble persisted.
Analysts said the loans had not resolved LG Card's problems.
"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."
"Despite the emergency financial aid, the company is at a very critical point," said Park Seok-hyun, an analyst at Kyobo Securities.
The 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.
"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.
Credit 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.
South 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.
LG 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.
Already, 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.
"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."
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest foundry service provider, yesterday said that global semiconductor revenue is projected to hit US$1.5 trillion in 2030, after the figure exceeds US$1 trillion this year, as artificial intelligence (AI) demand boosts consumption of token and compute power. “We are still at the beginning of the AI revolution, but we already see a significant impact across the whole semiconductor ecosystem,” TSMC deputy cochief operating officer Kevin Zhang (張曉強) said at the company’s annual technology symposium in Hsinchu City. “It is fair to say that in the past decade, smartphones and other mobile devices were
US-CHINA SUMMIT: MOFA welcomed US reassurance of no change in its Taiwan policy; Trump said he did not comment when Xi talked of opposing independence US President Donald Trump yesterday said he has not made a decision on whether to move forward with a major arms package for Taiwan after hearing concerns about it from Chinese President Xi Jinping (習近平). Trump’s comments on Taiwan came as he flew back to Washington after wrapping up critical talks in which both leaders said important progress was made in stabilizing US-China relations even as deep differences persist between the world’s two biggest powers on Iran and Taiwan. “I will make a determination,” Trump said, adding: “I’ll be making decisions. But, you know, I think the last thing we need right
TAIWAN ISSUE: US treasury secretary Scott Bessent said on the first day of meetings that ‘it wouldn’t be a US-China summit without the Taiwan issue coming up’ There were no surprises on the first day of the summit between US President Donald Trump and Chinese President Xi Jinping (習近平), the Mainland Affairs Council (MAC) said yesterday, as the government reiterated that cross-strait stability is crucial to the Asia-Pacific region, as well as the world. As the two presidents met for a highly anticipated summit yesterday, Chinese state media reported that Xi warned Trump that missteps regarding Taiwan could push their two countries into “conflict.” Trump arrived in China with accolades for his host, calling Xi a “great leader” and “friend,” and extending an invitation to visit the White House
SECURITY: Taipei presses the US for arms supplies, saying the arms sales are not only a reflection of the US security commitment to Taiwan but also serve as a mutual deterrent against regional threats Taiwan is committed to preserving the cross-strait “status quo” and contributing to regional peace and stability, the Presidential Office said yesterday. “It is an undeniable fact that the Republic of China is a sovereign and independent democratic nation,” Presidential Office spokeswoman Karen Kuo (郭雅慧) reiterated, adding that Beijing has no right to claim sovereignty over Taiwan. The statements came after US President Donald Trump warned against Taiwanese independence. Trump wrapped up a state visit to Beijing on Friday, during which Chinese President Xi Jinping (習近平) had pressed him not to support Taiwan. Taiwan depends heavily on US security backing to deter China from carrying
RSS