IFR International - 20.10.2018

People

&Markets

South Korea to renew corporate restructuring law

3OUTHû+OREAûISûSETûTOûRENEWûITSûCORPORATEû
RESTRUCTURINGûLAWûFORûAûFURTHERûlVEûYEARS û
WITHûTHEûINTRODUCTIONûOFûSOMEûNEWûFEATURES û
BUTûTHEûCHANGESûFALLûSHORTûOFûTHEûOVERHAULû
SOMEûHADûHOPEDûFOR
4HEûREFRESHEDû#ORPORATEû2ESTRUCTURINGû
0ROMOTIONû!CTûISûEXPECTEDûTOûTAKEûEFFECTûINû
.OVEMBER ûAFTERûTHEû.ATIONALû!SSEMBLYû
APPROVEDûTHEûBILLûONû/CTOBERûû4HEû#20!ûWASû
lRSTûENACTEDûINûûWITHûAûSUNSETûCLAUSE ûASûAû
TEMPORARYûMEASUREûINûRESPONSEûTOûTHEû!SIANû
lNANCIALûCRISIS ûANDûWASûREVISEDûANDûEXTENDEDû
SEVERALûTIMESûBEFOREûITûEXPIREDûINû*UNEûTHISûYEAR
4HEû#20!ûALLOWSûCOMPANIESûTOûPURSUEûOUT
OF
COURTûRESTRUCTURINGSûWITHûTHEûAPPROVALûOFû
lNANCIALûCREDITORSûHOLDINGûATûLEASTûûOFûTHEû
DEBTû)TûPROVIDESûANûALTERNATIVEûTOûAûVOLUNTARYû
WORKOUTûTHATûREQUIRESûTHEûAGREEMENTûOFûALLû
CREDITORS ûWHILEûAûCOURT
LEDûREHABILITATIONûISû
TYPICALLYûMUCHûSLOWER
h4HEûINTENTûBEHINDûTHEûENACTMENTûOFûTHEû
#20!ûHASûALWAYSûBEENûTOûPROVIDEûFORûAû
SPEEDIER ûMOREûSTREAMLINEDûALTERNATIVEûTOû
COURT
SUPERVISEDûREHABILITATIONûPROCEEDINGSû
FORûCOMPANIESûOVERBURDENEDûWITHûlNANCIALû
DEBTûBYûPROVIDINGûFORûAûBANK
LEDûRESTRUCTURINGû

PROCESSûAPPLICABLEûONLYûTOûCREDITORSûWITHû

lNANCIALûCLAIMSûIEûCOMMERCIALûCLAIMSûAREûNOTû

AFFECTED    vûSAIDû+IMû*I

0YOUNGûPARTNERûOFû+IMû

û#HANGûLAWûlRM

h"YûFOCUSINGûONûlNANCIALûCLAIMSûONLYûANDû

ASSIGNINGûAûCOMPANYSûPRIMARYûCREDITORûBANKû

TOûLEADûTHEûRESTRUCTURINGûTHEûEXPECTATIONûHASû

BEENûANDûCONTINUESûTOûBE   ûTHATûRESTRUCTURINGû

CANûBEûCOMPLETEDûINûAûMUCHûSHORTERûPERIODûOFû

TIMEûANDûWITHûLESSûDISRUPTIONûTOûAûCOMPANYSû

DAY

TO

DAYûBUSINESSûASûCOMPAREDûTOûAû

RESTRUCTURINGûPURSUANTûTOûAûREHABILITATIONû

PLANûADOPTEDûTHROUGHûCOURT

SUPERVISEDû

REHABILITATIONûPROCEEDINGSv

3INCEûITSûEXPIRYûTHEREûHAVEûBEENûONGOINGû

DISCUSSIONSûREGARDINGûWHETHERûTHEû#20!û

SHOULDûBEûRE

ENACTEDûASûPERMANENTûLAWûORû

THEûPROVISIONSûSHOULDûBEûABSORBEDûINTOûOTHERû

LEGISLATIONSûSAIDû+IMû3Yû.AEûAûMEMBERûOFû

THEûDISPUTEûRESOLUTIONûGROUPûATû3OUTHû

+OREANûLAWûlRMû9ULCHON

QUICKER RESTRUCTURING?

!CCORDINGûTOûAûREPORTûSUBMITTEDûTOûTHEû

3OUTHû+OREANûGOVERNMENTûINûûITûTAKESû

APPROXIMATELYûFOURûMONTHSûONûAVERAGEûTOû

ADOPTûAûRESTRUCTURINGûPLANûINûAûWORKOUTû

UNDERûTHEû#20!ûCOMPAREDûWITHûNINEû

MONTHSûINûAûCOURT

SUPERVISEDûREHABILITATIONû

PROCEEDING

"UTûITûTYPICALLYûTAKESûTHREEûTOûFOURûYEARSûTOû

EXITûFROMûAûWORKOUTûUNDERûTHEû#20!û

COMPAREDûWITHûTWO

AND

A

HALFûYEARSûINûAûCOURT

SUPERVISEDûPROCESSûSAIDû+IMûû#HANGSû+IM

4HEûRENEWEDûLAWûWILLûHAVEûTWOûSMALLû

CHANGESû#REDITORûCOMMITTEESûNOWûHAVEûTHEû

CHOICEûOFûWHETHERûORûNOTûTOûDISCLOSEûTHEû

PERIODICALûREPORTSûONûTHEûCREDITûASSESSMENTû

OFûTHEûDEBTORûWHICHûAREûREQUIREDûUNDERûTHEû

LAWû3UCHûDISCLOSURESûHAVEûOCCASIONALLYûHADû

AûNEGATIVEûIMPACTûINûTHEûPAST

3ECONDûTHEûNEWû#20!ûHASûANûEXEMPTIONûOFû

LIABILITIESûCLAUSEûFORûTHEûCREDITORûlNANCIALû

INSTITUTIONSûANDûTHEIRûOFlCERSû4HATûWILLûGIVEû

THEMûMOREûFREEDOMûTOûMAKEûSTRATEGICûDECISIONSû

WITHOUTûWORRYINGûTHATûTHEYûCOULDûBEûSUED

9ULCHONSû+IMûSAIDûTHEREûHADûNOTûBEENû

ENOUGHûMAJORûRESTRUCTURINGûCASESûDURINGûTHEû

PASTûTWOûYEARSûTOûTESTûWHETHERûTHEûLATESTûVERSIONû

OFûTHEû#20!ûnûWHICHûPREVIOUSLYûEXPIREDûINû

$ECEMBERûûnûHADûBEENûEFFECTIVE

Daniel Stanton

Santander ‘lucky’ over Banco Popular deal

!ûBOARDûMEMBERûOFûSANTANDERûSAIDûTHEû3PANISHû
BANKûWASûLUCKYûITûHADûSEENûINFORMATIONûONû
"ANCOû0OPULARûWEEKSûBEFOREûITûWASûPUTûINTOû
RESOLUTIONûLASTûYEAR ûMAKINGûITûMOREû
COMFORTABLEûABOUTûBUYINGûITSûTROUBLEDûPEER
h7EûWEREûLUCKYûASû0OPULARûHADûTRIEDûTOû
lNDûNEWûSHAREHOLDERSûBEFOREûTHATûWEEKûSOû
WEûHADûAûCHANCEûTOûLOOKûATûTHEûBANK vû"ELENû
2OMANAû'ARCIA ûHEADûOFû3ANTANDERSûAUDITû
COMMITTEE ûTOLDûTHEû%5Sû3INGLEû2ESOLUTIONû
"OARDSûANNUALûCONFERENCEûLASTûWEEK
h)NûNORMALûCIRCUMSTANCESûYOUûWOULDûNOTû
HAVEûTIMEûTOûDOûTHATûxû4HEREûISûNOTûMUCHû
TIMEûTOûGETûINFORMATION vûSAIDû'ARCIA
"EFOREûJOININGû3ANTANDERSûBOARDûINû
$ECEMBERû û'ARCIAûWASûPRESIDENTûOFû
3AREB û3PAINSûBADûBANK ûWHICHûBOUGHTûNON
PERFORMINGûASSETSûFROMûRESTRUCTUREDûLENDERS
3ANTANDERûAGREEDûTOûBUYû0OPULARûINû*UNEû
ûFORûAûTOKENûõûAFTERûITSûJUNIORûBONDHOLDERSû
HADûSEENûTHEIRûINSTRUMENTSûCONVERTEDûINTOû
EQUITYû3OMEûOFûTHESEûINVESTORSûHAVEûSINCEû
BROUGHTûACTIONSûAGAINSTûTHEû32"ûANDû3PANISHû
AUTHORITIESûSEEKINGûCOMPENSATION
)NûANûINTERNALûDOCUMENTûSEENûBYû)&2 ûWHICHû
WASûPRESENTEDûTOû3ANTANDERSûBOARDûINû-AYû
 ûJUSTûTWOûANDûAûHALFûWEEKSûBEFOREû
0OPULARSûRESOLUTION ûTHEREûWASûAû
RECOMMENDATIONû3ANTANDERûSHOULDûONLYû
PROCEEDûWITHûAûBIDûIFû0OPULARûWASûINûRESOLUTIONû

ANDûAFTERûITSûJUNIORûBONDSûHADûBEENûBAILEDûIN

0OPULARSûLARGESTûSHAREHOLDERûBEFOREûITSû

RESOLUTIONû-EXICANûBILLIONAIREû!NTONIOûDELû

6ALLEûWASûPREPAREDûTOûBACKûAûõBNûCAPITALû

RAISEûBEINGûPUTûTOGETHERûBYûPARTIALû

UNDERWRITERSû"ARCLAYSûANDû$EUTSCHEû"ANK

"UTûTHATûNEVERûPROCEEDEDûASû0OPULARûFACEDû

AûRUNûONûTHEûBANKûWHICHûENDEDûUPûWITHû

AUTHORITIESûPUTTINGûTHEûBANKûINûRESOLUTION

$ELû6ALLEûANDûAûGROUPûOFûBONDHOLDERSûHAVEû

LODGEDûACTIONSûINû53ûCOURTSûINûAûBIDûTOûFORCEû

3ANTANDERûTOûREVEALûWHATûITûKNEWûABOUTû

0OPULARSûLIQUIDITYûPOSITIONûBEFOREûITSû

RESOLUTIONû4HEû"ANKûOFû3PAINûDECLINEDûTOû

GRANTûõBNûOFûEMERGENCYûLIQUIDITYûASSISTANCEû

INûTHEûDAYSûBEFOREû0OPULARûFAILED

h,IQUIDITYûWASûAûHUGEûISSUEûBEFOREûANDûAFTERû

THEûRESOLUTIONvûSAIDû'ARCIAûh4HEû0OPULARû

SITUATIONûMADEûCLEARûTHEREûISûAûNEEDûFORûSOMEû

SORTûOFûFUNDINGûBACKSTOPû;INûRESOLUTION=ûTOûGIVEû

MOREûTIMEûINûSUCHûSITUATIONSv

“WE WERE LUCKY”

$OMINIQUEû,ABOUREIXûAûDIRECTORûOFûTHEû32"û

SAIDûTHEûPARTICULARûCIRCUMSTANCESûOFûTHEû

0OPULARûCASEûWEREûFORTUITOUSûh7EûWEREûLUCKYû

ASû0OPULARûHADûSTARTEDûAûPRIVATEûPROCESSûANDûITû

WASûANûINCREDIBLEûHELPûFORûUSûTOûMOVEû

TOWARDSûAûFAIRûANDûTRANSPARENTûPROCESS

h7EûWEREûDRIVENûBYûTHEûLIQUIDITYû

SITUATIONû4HEûREALûPROBLEMûWASûTHEûBANKû

RUNûISSUEû7EûNEEDEDûTOûlNDûAûSOLUTIONûANDû

SELLûTHEûBANKûTOûSOMEONEûELSEû4HATû

HAPPENEDûTHEûDAYûAFTERûTHEûRESOLUTIONûWITHû

3ANTANDERûPUTTINGûINûLIQUIDITYûIMMEDIATELYv

,ABOUREIXûSAIDûTHEûDIFlCULTYûCAMEûINû

JUDGINGûWHENûAûBANKûWASûhLIKELYûTOûFAILvûANDû

NEEDINGûTOûBEûRESOLVED

h4HISûRAISESûEXTREMELYûDIFlCULTûQUESTIONSvû

HEûSAIDûh)FûWEûINTERVENEûTOOûEARLYûTHEûCOSTSû

AREûHIGHERûTHANûNORMALû!TûWHATûMOMENTû

CANûWEûIMPLEMENTûTHEûDECISIONv

*AIMEû0ONCEûPRESIDENTûOFû3PAINSûBANKû

RESTRUCTURINGûFUNDû&2/"ûLATERûSAIDûPLANNINGû

FORûAûRESOLUTIONûWASûIMPORTANTûBUTû

REGULATORSûHADûTOûBEûNIMBLE

h!SûBOXERû-IKEû4YSONûSAIDûEVERYBODYûHASûAû

PLANûUNTILûHEûGETSûPUNCHEDûINûTHEûMOUTHû9OUû

HAVEûTOûSOLVEûPROBLEMSûONûTHEûSPOTvû0ONCEûSAID

(EûSAIDûTHEûMOSTûEFFECTIVEûSTRATEGYûTOûSAVEûTHEû

CRITICALûFUNCTIONSûOFûAûBANKûISûTOûSELLûTHEûBUSINESS

h4HISûISûTHEûSINGLEûWAYûTOûPREVENTû

CONTAGIONûSYSTEMICALLYû7ITHû0OPULARûTHEû

BANKûREOPENEDûûHOURSûAFTERûITûWASû

DECLAREDûFAILINGûORûLIKELYûTOûFAILv

32"ûCHAIRû%LKEû+OENIGûSAIDûTHEûû

INDIVIDUALSûWHOûSAIDûTHEYûHADûBEENûAFFECTEDûBYû

ITSûDECISIONûTOûRESOLVEû0OPULARûWILLûHAVEûFROMû

.OVEMBERûûTOûûTOûSUBMITûSPECIlCûCOMMENTS

Christopher Spink