Bank pressures LG on loans
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Credit card companies have been hit by action to deflate a credit bubble.
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SEOUL, South Korea (Reuters) -- LG Group's chairman Koo Bon-moo must provide more collateral to secure loans for South Korea's biggest credit card company LG Card, its main creditor bank says.
A spokesman for Woori Bank told Reuters Thursday the bank wanted the family owners of LG Group, South Korea's second-largest conglomerate, to provide more assets in return for loans of two trillion won ($1.7 billion) to the cash-strapped card issuer.
LG Group had offered an unspecified amount of assets owned by its chairman Koo, when it asked banks on Tuesday for the loans.
"We would like to see LG provide enough group-wide support to back up the loans they asked for," said Kim Kil-in, the Woori spokesman.
He said assets already offered were mostly shares in LG Group's financial units but the bank wanted Koo also to offer stocks in other core affiliates of the group, such as its holding company, LG Corp.
LG Group had no comment on the bank's request.
Shares in LG Card dropped 4.5 percent to 9,090 won near midday Thursday, after tumbling 14.2 percent on Wednesday. The broader market is up 0.9 percent.
The liquidity problems at LG Card triggered fears over the industry's health risks to their creditor banks, hitting South Korea's stock market hard on Wednesday.
LG Card and other credit card firms have been hit by snowballing losses from defaults this year. The government has taken steps to deflate a credit bubble, tightening rules on card issuing. That has compounded headaches for the card companies.
Copyright 2003
Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
