Kookmin Bank Interrupts a Transaction of 400,000 Customers "

Kookmin Bank is scheduled to stop a transaction by sorting 400,000 customers who have receive a cash service with a credit card in over three card companies as `potential delinquent customers`. Also, the bank decided not to newly issue the card to employees of small companies and independent businessmen and interrupted the card loan. On November 28, Kookmin Bank announced that it would execute such “Emergency Measure` to make the credit card business substantial and solid.

In particular, it has defined a limit of the card as `0 won` for 150000 customers who are currently behind their dues, and so they were divested of a membership. It has also restricted customers of new credit card registration to 12 job groups such as △government employees, △Executives of listed companies, △Employees of public companies and government investment companies, △ Lawyers, and △ Doctors. However, it has suspended the card issuance for 5 job groups including the independent businessman who didn`t make a certificate of income and employees of small companies which have less 3 billion of sales.

Kookmin Bank decided to stop the card loan to solve a problem of card insolvency from November 29. The dramatic measures of Kookmin Bank will have a tremendous influence on other banks and card companies.

Lee Gwang-Ju, assistant director of card service division, Kookmin Bank said, “We couldn`t help taking such extreme measures owing to increasing credit card insolvency.”

Including Kookmin Bank, commercial banks have decreased the household loans by an expedient method and so were blamed.

Commercial banks have changed the loans for the independent businessmen which have occupied 20% of total household loans into the corporate loans aiming at decreasing the household loans.

Financial Supervisory Service (FSS) started an investigation into an actual condition of corporate loans including SOHO (Small Office Home Office).

According to the FSS and financial industries, Kookmin Bank modified SOHO loans into the corporate loan from the household loans on November 14.

Focused on the SOHO loan marketing, other commercial banks have changed the asset classification to the corporate loans.

Jeong Seong-Sun, director of Deposit Takers, FSS said, “If the loan doesn`t include the certificate of business registration, it must be assorted as the household loan. If there is the certificate of business registration and the loan is spent for the business, the loan must be classified as the corporate fund. We have been currently investigating the actual condition of corporate loans including SOHO loan.”

In this regard, Kookmin Bank explained, “We have not modify such loans into the corporate loan to decrease total amounts of household loans, but just have applied the new system for the SOHO financial execution.”

Dong-Won Kim Chi-Young Shin daviskim@donga.com higgledy@donga.com