Wednesday, December 18, 2002
BOLDLY FOLLOWING THE U.S. LEAD: South Korean banks and consumers plunge headlong into unprecedented levels of consumer debt.
Banks have also flooded the country with credit cards, prompting a consumer spending binge and a rise in delinquency rates that worries government officials. But for the banks, scale is everything, even if loss rates rise along the way: each of the remaining eight commercial banks with nationwide operations, down from 26 before the 1997-98 crisis, wants to be one of the four or five that analysts say will be left standing in three years.
The 1997-98 crisis also claimed as casualties many of the country's chaebols — sprawling industrial conglomerates like Hyundai and Daewoo that dominated the economy for decades. The soundest parts of those groups, like Hyundai Motor, are now thriving independently, while their weaker former siblings struggle through bankruptcy. But their breakup has obliged the banks to wean themselves away from their former habit of lending almost exclusively to companies.
They have done so with a vengeance: consumers account for nearly half the $405 billion in lending the banks will do this year.
