LG Card Retains Its Attraction For Lenders as Takeover Target
To some it's a head-scratcher: Why would anyone want to buy severely cash-strapped LG Card? The answer may lie in its nearly 10 million cardholders.
On Jan. 3, shares of LG Card, South Korea's largest issuer of credit cards, plunged 15% -- the maximum daily limit on the Korea Stock Exchange. The selling frenzy, which wiped out more than $1 billion in market value, was triggered by news of LG Card's second financial bailout in a year.
In the new package, LG Card is getting one trillion won ($956 million) from its creditors and affiliates of LG Group, the Korean conglomerate that used to own it. The debt-for-equity swap at the heart of the bailout would reduce the value of LG Card's existing shareholdings by four-fifths.
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LG Card has been a financial basket case, one of the biggest casualties of last year's Korean household credit crunch. Currently weighed down by 10.8 trillion won in debt, the company barely stayed afloat even after receiving a 3.78 trillion won infusion from creditors in January 2004.
The new bailout is the latest chapter in a saga that began four years ago, when the government was encouraging consumer borrowing to fuel economic growth. Consumers went on a binge, causing credit-card debt to balloon and the number of defaults to soar. As a result, credit-card use declined.
"I question whether the most recent bailout package will really stabilize LG's operations," says a representative of a foreign investment company that was considering an acquisition of LG Card early last year, and who now says he wouldn't touch it.
Yesterday, shares of LG Card rose 40 won to 7,910 won apiece. But that's 58% below the share's 52-week high of 19,050 won. And the stock has plummeted 50% since the latest rescue plan was signed Dec. 31.
But some players in Korean finance still see an attraction in LG Card.
"As much as we are a one-stop financial institution, Woori would be interested in acquiring LG Card" should the company be placed on the auction block, said Hwang Young Key, chairman of Woori Financial Group, after the new rescue was hammered out. Woori is the country's third-largest financial institution, with 120.7 trillion won in assets. The company, 79%-owned by the government, has its own credit-card business, with some five million cardholders.
Hana Bank Chief Executive Kim Seung Yu said his company would be interested in expanding its credit-card business after the bailout package, but didn't elaborate.
Several analysts say it makes sense for Korean lenders to make a run for LG Card. "As long as there's a solid credit-risk management in place, [the] credit-card business is a good weapon to compete with for Korean lenders," says Terence Lim , head of research at Goldman Sachs in Seoul.
Indeed, the race between the country's largest banks to bulk up their credit-card muscle is on. The market has too many entrenched players. For the nation's banks, the challenge has been getting new clients and finding new sources of revenue. Taking over LG Card could help answer those needs.
The credit-card sector has been rattled by skyrocketing delinquencies, after consumers who easily got credit cards in early 2000 had trouble paying their bills. But issuers have made great strides in solving their problems by focusing on beefing up collections, reducing credit lines and tightening standards. According to the Financial Supervisory Service, the country's financial watchdog, the average delinquency rate for South Korea's credit-card companies stood at 23.06% in the third quarter of last year, down from 25.12% in the previous quarter. At LG Card, the delinquency rate was 20.39%, down from 25%.
Credit-card debt is also on a downward trend. In the third quarter, it stood at 41.9 trillion won, down from 45.7 trillion won in the previous quarter.
Other analysts note that card companies in South Korea are, in many ways, "subprime" lenders -- companies that extend loans to individuals with poor credit records. Subprime loans are particularly volatile because their borrowers by definition are higher-risk and often the first to default. The loans are usually extended at much higher interest rates than those charged by banks.
"Because subprime loans have higher rates, it can be a good source of profit growth for lenders such as Woori," says Scott Seo, head of research at J.P. Morgan Securities in Seoul. "That is, with the caveat that the loans are properly managed."
However, analysts warn that while delinquency rates and credit-card debt are declining, risks remain. South Korean consumer confidence fell to a four-year low in December, the seventh decline in eight months. According to the Korea Federation of Banks, the number of individuals three months or more behind on debt payments, as of Nov. 30, was equivalent to one in every 13 of the country's 48 million people.
"What it boils down to is the direction of the Korean economy," now beset by sluggish domestic consumption, Mr. Seo says. "If the economy is going to slow down from this point on, these credit-card issuers are going to get hammered even further, because everybody is focused on credit-card debt."
LG Card的魅力尚存
对于一些人来说，现金严重不足的LG Card无疑是个沉重的包袱，尽管如此，仍有人愿意买下这家公司，答案或许就在LG Card拥有的近1,000万名信用卡用户的身上。
1月3日，韩国最大的信用卡发行商LG Card的股价下跌了15%，以跌停板报收。汹涌的抛盘使该股的市值一下子蒸发了10亿美元以上。有关该公司1年来第二次接受财政援助的消息导致抛盘大量涌现。
在最新的拯救方案中，LG Card将从债权人及其前母公司LG Group处获得1万亿韩圆（合9.56亿美元）的贷款。以债转股为核心的拯救方案将导致LG Card现有股东权益缩水五分之四。
由于成为了韩国去年爆发的家庭信贷危机的主要受害者，LG Card一直是岌岌可危。该公司现有的负债高达10.8万亿韩圆，即便在2004年1月得到了债权人3.78万亿韩圆的注资，但仍徘徊在破产的边缘。
4年前，韩国政府为了刺激经济增长，在全国范围内掀起了一股借贷消费的风潮。消费者的过度透支消费导致信用卡负债急剧膨胀，欠款也随之激增。此后，刷卡热有所降温。
一家外国投资公司的代表对最新的一揽子救助能够帮助LG Card度过危机、经营恢复正常表示怀疑。这家投资公司在去年初曾考虑过收购LG Card，但现在已打消了这个念头。
LG Card昨日上涨40韩圆至7,910韩圆，但仍比19,050韩圆的52周高点低58%。自从去年12月31日签署了最新的援助协议之后，该股已经重挫了50%。
但韩国一些金融界人士认为LG Card还是有收购价值的。
友利金融集团(Woori Financial Group)的董事长Hwang Young Key在LG Card获得最新资助之后表示，如果LG Card决定寻找买家，作为一个提供一站式服务的金融机构，该集团有意将LG Card收归旗下。友利金融集团是韩国第三大金融机构，拥有120.7万亿韩圆的资产。韩国政府控股的友利金融集团也有信用卡业务，拥有500万左右的信用卡用户。
韩亚银行(Hana Bank)的首席执行长金胜猷(Kim Seung Yu)表示，在获悉LG Card得到援助之后，该行有意拓展其信用卡业务，但他没有提及扩张计划的详情。
有几位分析师表示，韩国金融机构将LG Card纳入麾下是物有所值的。高盛(Goldman Sachs)驻汉城的研究部门主管Terence Lim表示，只要能对信贷风险进行严格的管理，信用卡部门就是同其他金融机构相抗衡的有力武器。
实际上，韩国各大银行为了扩大各自的信用卡业务正在展开如火如荼般的竞争。韩国的信用卡市场已是群雄割据的局面。对于各家银行来说，困难在于寻找新客户和收入来源。收购LG Card后，这些或许就能迎刃而解。
不少消费者难以偿债信用卡贷款导致韩国信用卡行业的拖欠率直线攀升。但发行商通过加速收帐、削减信贷额度、收紧审批标准等措施使得拖欠率得到了显著改善。据韩国金融监督局(Financial Supervisory Service)提供的数据，韩国信用卡公司去年第三季度的平均拖欠率从前一季度的25.12%下降至23.06%。LG Card信用卡业务的拖欠率也从25%降至20.39%。
信用卡债务也呈下降之势。第三季度的信用卡债务为41.9万亿韩圆，低于前一季度的45.7万亿韩圆。
其他分析师也指出，韩国的信用卡企业往往是高风险贷款发放机构，他们向那些信贷纪录不佳的消费者发放贷款。高风险贷款具有很大的风险，因为这种贷款借贷者是最容易发生欠款的。因此，这种贷款收取的利率往往远远高于银行的普通贷款利率。
JP摩根(J.P. Morgan Securities)驻汉城的研究部门主管Scott Seo表示，由于高风险贷款收取的贷款利率较高，因此对于友利金融集团等金融机构来说信用卡业务可以成为一个很好的盈利增长点，但前提是必须建立起严格的风险管理机制。
尽管拖欠率和信用卡债务均在下降，但分析师们警告说风险依然存在。去年12月，韩国消费者信心指数在过去8个月中第七个月下滑，降至了4年来的低点。另外，韩国银行协会(Korea Federation of Banks)称，截至去年11月30日，韩国每13个国民中便有1人逾期未能偿还信用卡债务达到3个月或更长的时间。以韩国4,800万的人口计算，这可不是一个小数字。
Seo表示，归根到底，信用卡行业的发展前景要取决于韩国经济的走向。如果经济增长放缓，那么信用卡发行商的日子会更加难熬，因为他们的信用卡债务负担都很沉重。
