Lone Star Selects Korea as Hub of Asian Operations

U.S. investment fund Lone Star, which took over Korea Exchange Bank (KEB) last month, said Sunday that it will develop South Korea as the hub of its Asian operations.

It is notable that its decision fits well in with the directions of the Roh Moo-hyun government`s economic policies to make the nation as the hub of the Northeast Asia.

“With the takeover of Korea Exchange Bank as a momentum, we are going to expand our operations in Korea,” said the Texas-based investment firm. “Considering operational advantages and the demand by Deputy Prime Minister and Finance-Economy Minister Kim Jin-pyo, we selected Korea as the hub of our Asian operations.”

Lone Star will establish its Asian headquarters in Seoul, which will coordinate all investment decisions in Asia including China, except for Japan. In addition, all human resources and information technology will be managed in Korea, it explained.

As the U.S.` Global Finance Journal named KEB as one of the world`s best trade finance banks, the investment fund is intended to make KEB as a globally leading bank in trade and make an announcement on specific improvement plans.

“It is true that Finance-Economy Minister asked the fund to review plans to establish its Asian headquarters in Korea,” an official of the Ministry of Finance and Economy in relation to this. “It is noteworthy that Lone Star`s decision is the first outcome of the incumbent government that pushes for making Korea as the hub of the northeast Asia,” he added.

However, a bank official said that Lone Star, of which attempts to advance to banks in other countries failed, did a favor as a reward to the government that approved the fund to take over KEB. “Even if Lone Star establishes its headquarters in Korea, it will have little effects on the Korean economy,” he pointed out.

Lone Star, established in Dallas, Texas, in 1991, is an investment fund operating in 14 countries and has invested mainly in real estate and restructuring. Its global asset reached 18 billion dollars with its investment in Korea amounting to 9 billion dollars.

The investment firm has been seeing a huge amount of profit in Korea by buying and selling non-performing assets since the financial crisis in 1997. It has bought a 51-percent stake of KEB by the end of August, increasing its investment in other Korean companies including the stationery company Morning Glory, Korea Investment and Securities and Daehan Investment and Securities.

Joong-Hyun Park sanjuck@donga.com