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Last Updated:  Tuesday, 25 March, 2003, 07:44 GMT
Panic eases after Korea scandal
Central Bank worker
The central bank is desperate to rebuild confidence
The panic injected into South Korea's markets by the accounting scandal at SK Global is finally easing, the Central Bank of Korea believes.

In a statement on Tuesday, the bank said that the rush to withdraw funds associated with the stricken company or from troubled credit card issuers has slowed sharply.

At its peak on 12 March, the bank said, 5 trillion won ($4bn) was being pulled out every day. That flow has now fallen by 90%.

But even if the SK effect is waning, the after-effects of Korea's credit boom are still hitting financial institutions, as LG Card - one of the main issuers of credit cards in Korea - reported that overdue payments suged to 9.4% of total assets in February from 7.3% in January.

LG Card's shares took a battering as a result, falling more than 10%.

Credit crunch

South Korean consumers' love affair with the credit card has helped drive the economy through the tough times of the past year or so.

But local media say this has come at a price, with bad debts at credit card companies totalling as much as 11 trillion won.

This has forced the government to offer to buy almost half of them with public funds.

The troubles at SK Global, the trading arm of the country's fourth biggest conglomerate, are part of the same picture.

The company, which has admitted to fiddling its figures to the tune of $1.2bn, is now being pored over by creditors trying to restructure it while its debt repayments are frozen for three months.

The war against Iraq and the nuclear stand-off with North Korea are other factors pulling sentiment in South Korea down.

Korea warns of war slowdown
21 Mar 03 |  Business
Firm admits $1.2bn accounts error
11 Mar 03 |  Business
Korea in 'chaebol' crackdown
04 Mar 03 |  Business
South Korea's credit card headache
03 Feb 03 |  Business
Country profile: South Korea
10 Mar 03 |  Country profiles
Timeline: South Korea
10 Mar 03 |  Country profiles

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