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To: maceng2 who wrote (511)	1/9/2004 4:24:48 AM
From: maceng2	Respond to of 1417

'Disaster' risk at Korean lender news.bbc.co.uk South Korean banks were locked in talks on Friday to save the country's biggest credit card lender from bankruptcy. One third of South Koreans hold LG Card Co's plastic but their failure to pay off loans has left the credit card firm in debt and in need of a bailout. Finance Minister Kim Jin-Pyo said there was a consensus LG Card could not be allowed to collapse because "it would be a disaster". Its creditors are divided over a $4.2bn bailout to pay debts due on Friday. Confidence at risk LG Card blocked customers from making cash withdrawals on Thursday, the second time it has taken this step in just over three months. The last time was in November 2003, shortly before it negotiated a rescue package of 2 trillion won ($1.7bn). Government officials are worried that the ripples from any collapse of LG Card would spread throughout the country's financial sector; Mr Kim warned the financial industry would face "significant losses". LG Card's total debt amounts to 21 trillion won ($17.8bn). Mr Kim said the impact on South Korea's economy if LG Card fails would be bigger than that, costing about 27 trillion won or ($23bn). The collapse of such a well-known lender would dent confidence among ordinary Koreans, who are once again enjoying relatively good economic times after the painful years of the Asian financial crisis and the 2001-02 recession. Credit card-fuelled consumer spending played a significant role in South Korea's economic recovery but left a legacy of bad debt. About 10% of South Koreans are unable to repay money they owe. Tough talks Any rescue plan will need the unanimous backing of LG Card's creditors. They are reportedly still unhappy with LG Group's desire to cap the its future financial support to its credit card unit at $317m. South Korean household debt stood at 440 trillion won at the end of September, up 3.7% on 2002, according to the Bank of Korea. This means that the average household is carrying debts of 31.38 million won ($26,000; £14,658).