Financial Institutions to Be Privatized Next Year

The government decided to speed up the privatization of the financial institutions such as the banks supported by the public fund. Thus, the government is likely to set up to privatize the state-owned financial institutions within this year earlier than the original plan scheduled after the second half of next year when the stock market will pick up.

In the Cabinet meeting yesterday, President Kim Dae-Jung directed the ministers to establish and execute the plan to privatize the financial institutions that the government owned.

President Kim told that ``as a result of the government investing much public fund to resolve the insolvency of the financial institutions during the money crisis, the government unintentionally owned the financial institutions. However, the government`s ownership is neither normal nor desirable in the sense it opposes the market principle and the international standard, and the financial business is the service business.``

Saying that ``the government has actually hesitated (to privatize the financial institutions), considering the situation of stock market, but now it should set up the privatization plan and pursue it.`` President Kim ordered ``the cabinet to sell the stocks or to continue the overseas sales.`` And pointing out that there has been no progress on the overseas sales of Seoul Bank and Korealife Insurance, he urged Deputy Prime Minister and Minister of Finance and Economy Jin Nyum to accelerate the disposal of those two financial institutions.

A high-ranking official of the government told that ``according to the president`s direction, the government will sell its shares of the commercial banks and the insurance companies to the domestic and foreign companies, and as a result, the privatization of the financial institutions will be pushed up. And more concrete following measures will be established soon.``

The other official said that ``currently, while foreigners can purchase 10 percent of shares of the domestic banks after notifying to the Financial Supervisory Commission (FSC) and can acquire maximum 100 percent of shares with the approval of the FSC, the domestic companies and the natives can own only under 4 percent of shares. Thus, problematically, it is not easy for the domestic companies to purchase the banks` shares. Hence, the government will review the plan to ease the regulations to restrict the domestic companies` ownership.``

Yun Seung-Mo ysmo@donga.com