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Japanese Lending Companies Make Money in Korea by Korean Money

Japanese Lending Companies Make Money in Korea by Korean Money

Posted August. 18, 2002 22:36,   


It was revealed that Japanese money lending companies supply 87% of operating fund not from Japan, but from Korea. Particularly, the half of domestic supply comes from creditors of private money market.

On August 18th, According to Financial Supervisory Service (FSS), the 11 Japanese companies operating in Korea such as A&O International, Progress Happy Ready, etc has loaned 880 billion Won at the end of June.

The companies supply the fund by 38.5 Won of initial capital, 72.3 billion of borrowing from Japan and 769.2 billion of domestic borrowing. According to the domestic borrowing △ 438.1 billion Won from private creditors △ 245.6 billion Won from mutual saving banks △ 46.3 billion Won from 7 commercial banks including Seoul Bank, ING Bank, etc △ 33.2 billion Won from 8 lending companies including credit card, allotment lending companies, etc △ 6 billion Won from financing companies, etc.

Japanese lending companies borrow the fund at interest rate of 15-18% from official financial institutes and 20% from private financial market and lend the fund to citizens at 90-100%. Domestic financial institutes choose them as a best subject to invest and private creditors don’t have the assessment ability on borrowers, so choose them as the easiest lending method.

FSS estimates that as ‘ regulation of lending business’ is enforced, unreasonable credit collection is restricted, and annual maximum interest rate is restricted at 70%, so the operation of Japanese lending companies will be declined.

So, FSS sent official letter to financial institutes to restrain from lending to Japanese lending companies. Additionally, FSS will prevent preponderant lending to them by amending the ‘regulation of mutual saving banks’.

Do-Young Kim nirvana1@donga.com