Posted February. 28, 2001 15:24,
``Why make such a sudden announcement?``
This was the initial reaction of the local money market when creditor banks of Hyundai Engineering and Construction (HEC) said Tuesday that they would announce steps to deal with the situation at their cash-strapped client company.
The reaction was natural as the financial plight of HEC was not so pressing as to unduly upset the financial community.
``Anything special?`` asked a reporter.
``It is almost the same plan as we announced before. We are not eager to make the announcement but the government wants us to do it now,`` a creditor bank executive said.
``What do you think is the reason?`` the reporter demanded.
``You know why! The government is committed to completing reforms in the four major sectors by the end of February,`` the banker said.
He exhibited a large measure of displeasure at the government`s prodding.
The announcement made that day was nothing new, only repeating the proposal of assets-for-equity swaps in the event HEC`s self-rescue program proves inadequate -- an idea that was first proposed last year. Reporters had good reason to inquire not so much about the content of the announcement as about its background, but no convincing answers were forthcoming.
Market watchers also were skeptical of the abrupt announcement Monday of a step toward merging three domestic banks, namely Shinhan, Industrial and Foreign Exchange banks. Until that time they were trying to hush up the proposed merger, typical of banks that are reluctant make formal announcements of prospective mergers.
A Shinhan Bank executive said the government advised him to make the announcement as soon as possible because there were a lot of rumors of mergers in the air. Most business analysts believe the announcement represents the government`s efforts to demonstrate its successful completion of the promised four-pronged reforms prior to President Kim Dae-Jung`s televised dialogue with the people scheduled for March 2.
The government made it a rule to publicly announce deadlines for reform in the aftermath of the 1997-98 economic crisis. In actuality, reforms are eminently difficult to complete in accordance with a specific timetable and can hardly be expected to finish ahead of a certain major political event.