When Korean government regulators reviewed the possibility of government bank KDB taking over Lehman Brothers (LEH), it wasn’t love at first sight. Jun Kwang-woo, Chariman of South Korea’s Financial Services Commission said that KDB should be “cautious,” stressing that such deals should be done by private players. FT:
“In principle, taking over a global investment bank can become an opportunity to raise the capability of the [Korean] investment banking business,” Mr Jun said. “But at the same time, as the risks are also big, KDB should take a cautious approach.”
“We welcome any efforts led by the private sector to go global, but it may not be proper for state-owned financial institutions to lead the role and take on excessive burdens,”
“Excessive burdens” may be the most diplomatic way to describe the $75 billion or so worth of risky assets Lehman has on its balance sheet. Either way, it’s a shame U.S. regulators aren’t as wary of risky behaviour as their Korean counterparts.
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