Subject category:
Economics, Politics and Business Environment
Published by:
IBS Case Development Center
Length: 9 pages
Data source: Published sources
Topics:
Foreign private equity funds; South Korean banking industry; Korean financial crisis; Asian financial crisis; Chaebols, Korean conglomerates; Asian tiger economies; Highly leveraged companies, high debt-equity ratio; Restructuring Korean financial and corporate structure; International Monetary Fund; Pegged exchange rate; Fixed and floating exchange rate; Debt restructuring; South Korean won; Carlyle Group, Newbridge Capital, Lone Star; South Korea's gross domestic product
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https://casecent.re/p/19572
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Abstract
The Korean banks were left debt-ridden with substantial non-performing loans in the aftermath of the Korean financial crisis of 1997-1998. These banks were nationalised and subsequently sold to foreign investors. Foreign private equity funds acquired some of the ailing Korean banks and injected the required capital and new management techniques. Their gamble has paid off, and the value of their investments has increased significantly. Now, when the foreign funds are cashing in on their investments, there is a growing fear in Korea that the foreign funds are focused on speculative gains and will have an adverse impact on the Korean financial industry in the long run. The case study sheds light on the role of foreign private equity funds in Korean banks and the perceived benefits and disadvantages these funds bring to the Korean financial industry.
About
Abstract
The Korean banks were left debt-ridden with substantial non-performing loans in the aftermath of the Korean financial crisis of 1997-1998. These banks were nationalised and subsequently sold to foreign investors. Foreign private equity funds acquired some of the ailing Korean banks and injected the required capital and new management techniques. Their gamble has paid off, and the value of their investments has increased significantly. Now, when the foreign funds are cashing in on their investments, there is a growing fear in Korea that the foreign funds are focused on speculative gains and will have an adverse impact on the Korean financial industry in the long run. The case study sheds light on the role of foreign private equity funds in Korean banks and the perceived benefits and disadvantages these funds bring to the Korean financial industry.