Korean Banking Restructuring
About Korean Banking Restructuring
After the Asian Financial Crisis hit South Korea in 1997, the government restructured the entire banking system. Non performing loans were removed from bank balance sheets. Weak banks were closed or merged. Foreign investors including Newbridge Capital acquired Korean banks. The government injected 65 billion in public funds. Korea First Bank was sold to Newbridge, then to Standard Chartered. Kookmin Bank became the largest Korean bank through mergers. The restructuring was painful but effective. Korean banks became profitable and well capitalized. The Korean financial sector emerged stronger from the crisis, though foreign ownership of Korean banks became controversial. South Korea became one of the few Asian countries to fully recover from the 1997 crisis.
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