Arab Today, arab today fss probing tong yang group\s moneylending unit
Last Updated : GMT 08:55:55
Arab Today, arab today
Arab Today, arab today

FSS probing Tong Yang Group\'s money-lending unit

Arab Today, arab today

Arab Today, arab today FSS probing Tong Yang Group\'s money-lending unit

Seoul - Yonhap

The financial regulator said Wednesday it has started a special probe into a financial arm of cash-strapped Tong Yang Group to check on its debt sales in connection with the conglomerate\'s liquidity shortage. The Financial Supervisory Service (FSS) has set out for an inspection on Tongyang Financial Services Corp., a wholly owned money-lending subsidiary of Tong Yang Securities Inc., the brokerage unit of the troubled namesake company Tong Yang Group. The probe came as South Korea\'s 38th-largest conglomerate is on the verge of bankruptcy after it ran out of cash to repay maturing debts worth 1.1 trillion won (US$1.02 billion) due to a slowdown in their building and hospitality businesses. The embattled family-run group has had no success in getting financial support from either its creditor banks or its former affiliate run by a relative. State-run Korea Development Bank (KDB), to which Tong Yang Group owes the majority of its bank loans, repeatedly denied the possibility that the lender will offer help to shore up the ailing conglomerate. \"We cannot help those who took high risks for high returns with taxpayer money,\" a KDB executive said, referring to investors who bought debts issued by Tong Yang Group. Hyun Jae-hyun, the head of Tong Yang Group, made a personal request to his brother-in-law Tam Chul-kon, who runs Korea\'s major confectioner Orion Corp., to provide a loan guarantee for new bond issuances. Tam refused. In a desperate move, Tong Yang Group was seeking to raise 65 billion won through selling 18-month notes on Thursday, but gave up after the FSS apparently put a brake on it, citing that the group failed to specify risk elements in its registration report submitted to the Korea Exchange. Later in the day, FSS Gov. Choi Soo-hyun held an urgent press briefing to ask investors not to fret about the situation and assured them that their assets are safely housed in the state-run depository and trustee banks in accordance with rules. Tong Yang Group\'s possible default has prompted a bank run among investors who flocked to a nearby branch to withdraw their securities accounts tied to the company debts. The FSS probe on Tong Yang Group\'s money lender follows the watchdog\'s preceding inspection on Tong Yang Securities, the main seller and manager of Tong Yang Group\'s debts, to see if there are any irregularities with the bond sales. Tong Yang Group has six financial arms under its wing. Of the liabilities, some 370 billion won worth of commercial papers (CPs), a type of short-term corporate debts, will come due within this year, the FSS said, adding to fears that the liquidity squeeze might lead to massive losses for retail investors who bought such bonds. The regulator noted Tong Yang Group may face more trouble with refinancing the debts in time since a change in local law, taking effect from next month, will prohibit a financial affiliate of a company from selling low-rated bonds issued by its parent firm or other subsidiaries. The financial watchdog said the probe is to prevent any financial losses that might incur from Tong Yang Group\'s potential default as that will be catastrophic for retail investors. According to FSS data, Tongyang Financial Services has so far issued 45.7 billion won worth of CPs. About 16,000 retail investors hold Tong Yang Group\'s CPs worth a total of 456.3 billion won, with some 31,000 others having invested in 1 trillion won worth of corporate bonds sold by the conglomerate.

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Arab Today, arab today fss probing tong yang group\s moneylending unit Arab Today, arab today fss probing tong yang group\s moneylending unit

 



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