Hong Sung Sook, a 67-year-old Seoul housewife, says she’s getting ready to pull $100,000 of savings out of Standard Chartered Plc (STAN)’s South Korean unit and put it in a local bank. Paul Yoo, 60, the former country head of Lone Star Funds, is locked up in jail and refuses to talk to the press.
Their stories help explain why six years have passed since any overseas investor has taken over a Korean financial company valued at more than $500 million, according to data compiled by Bloomberg. South Korean President Lee Myung Bak’s latest effort to sell Woori Finance Holdings Co. collapsed this month after the taxpayer-rescued firm failed to attract any bids from abroad.
Standard Chartered’s efforts to base pay on performance enmeshed it in the longest strike inKorea’s banking history, while Dallas-based Lone Star’s third attempt to exit a 2003 investment is entangled in court. Public mistrust of buyout firms, political opposition to government-backed reforms and abrupt regulatory changes may also deter fresh entrants.
“It’s clearly negative for foreign investors in any country to see a strike like this,” said James Rooney, chief executive officer of consulting firm Market Force Co. in Seoul. “Foreign investors can’t rely on South Korea’s government as rules are changed all the time.”
About 2,700 staff at Standard Chartered First Bank Korea Ltd. resumed duties yesterday for the first time in two months, while warning of further stoppages unless the company withdraws the new salary system. The union says performance-based pay would lead to job and wage cuts, while the company, known as SC First Bank, says it will improve competitiveness.