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Last Updated: Friday, 6 February, 2004, 06:29 GMT
Korean card debt hits new record
A worker stacking money for release to the market ahead of the Chuseok harvest festival
Korea's shopping binge has stored up problems
South Koreans are sinking deeper into debts caused by the rampant growth of credit cards, new figures show.

More than one in seven payments owed to the country's seven credit card issuers was a month or more overdue in December, the financial watchdog said.

The delinquency rate is a record for South Korea, and has already led to the near-collapse of market leader LG Card.

LG's state-sponsored bailout is now at risk because foreign-owned banks are reluctant to give it more money.

Turnaround

Huge demand for credit cards helped pull South Korea out of the economic slump into which it was pushed by the currency meltdown of 1997.

The crisis, which caused the won and many other Asian currencies to slump in value, triggered a huge shake-up in South Korean industry and shook the economy.

Credit-fuelled consumer spending helped turn things around, and LG Card - part of the massive LG Group, one of the conglomerates or "chaebols" which survived 1997 relatively intact - ended up with one in three of the cards in existence.

But now consumer spending is slowing in the face of the heavy debts demonstrated by the 14.3% delinquency figures.

And in LG's case, the consequence was a near-collapse which called for a $4.5bn bailout.

That bailout began to come apart on Thursday, when the Korea Exchange Bank said it was backing out.

Another bank, Hana, has also expressed doubts, and the government - whose Korea Development Bank is already managing LG Card - could end up having to step in to rescue the plan.


SEE ALSO:
Korean lender wins bailout deal
09 Jan 04  |  Business
S Koreans despair at debt crisis
09 Jan 04  |  Business
Consumer debt worry hits S Korea
29 Dec 03  |  Business
S Korean credit card debts swell
02 Dec 03  |  Business
Country profile: South Korea
06 Nov 03  |  Country profiles


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