Will the Korean Development Bank really save Lehman by buying a stake? Some analysts say “forget about it.” The KDB head, Min Euoo Sung, was brought in to privatize the bank, not make high risk deals:
BusinessWeek: Analysts are sceptical that Min can pull it off. That’s because Min was hired to prepare KDB for privatization—his top priority. “The name of the game now is hoarding resources to prepare for the winter,” says banking analyst Chang H. Lee at Daiwa Securities. “It certainly is not a tme to seek glory through expansion.
KDB’s privatization offers a test case for Korean President Lee Myung Bak’s policy of shoring up the country’s financial sector. Few Korean banks have achieved the international presence of manufacturing powerhouses Hyundai and Samsung. Lee is eager to show that Korean banks can raise their profile on the international banking scene, while leading the country through its next wave of growth…
The problem is, few Korean banks have an appetite for high-risk, high-return deals now. The Korean media have named Woori Financial Holdings, Hana Bank, and Shinhan Financial Group as candidates to be KDB partners in a takeover offer for the Wall Street bank, but all of them have said they have no such plan. “Woori Financial has neither received any such proposal from KDB nor considered investment in Lehman,” says Woori spokesman Lee Won Chul. Hana has sent an e-mail to banking analysts denying the local media report
Korean regulators have made clear they will reject any KDB deal that requires spending taxpayers’ money. Another worry, says Financial Services Commission (FSC) spokesman Yoo Jae Hoon, is that an aggressive “adventure” of this sort could possibly hurt the country’s creditworthiness. “Deals deviating from government guidelines won’t get a green light,” says Yoo.
Last week, FSC Chairman Jun Kwang Woo ruled that KDB’s role in any investment in Lehman must be limited to that of a “catalyst.”
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