Korean Job Discussion Forums

[pkang0202]

I need some advice on investing in a CD at a Korean bank. First off, are they called CD's here? Which bank should I get the CD at (good interest rate, good service)?

Do I need to meet certain requirements in order to get a CD?

[Trevor]

I'm at KB getting 6.2%. I heard from a co-worker that they went up to 6.7 at KB but they fluctuate so I suggest going into a branch and ask the teller at the international service line. Yes, they are called CD's. I've heard from others here that Tomato bank pays 7%.

I don't think you need to meet any particular requirements.

In The U.S. a CD is 3% so its a no-brainer.

[pocariboy73]

If the korean banks start going bankrupt due to the current economic crisis as they did during the 1997 IMF intervention, banks such as TOMATO will be the first to fold. These are NOT the times to put money into those kind of 'banks'.

[Trevor]

Korea has federal deposit insurance up to 50,000 won. Frankly, it is safer than a U.S. bank, I think, and if there is no difference in terms of risk between putting money in a CD as opposed to a checking account. KB isn't going under any time soon and if it does, I am not sure where my money would be safe. I mean, really. A CD. Other than your mattress, what's safer?

[jvalmer]

Not 50, 000won. I think the number is 50,000,000 won. Although, it would make more sense boasting the covered limit to 100,000,000.

And, from what I've read, most Asian banks, and Korean banks, have limited exposure to the sub-prime fallout. Partly due to the lessons of '97 and not jumping on the opportunity that the American and Euro banks were. In this case, it saved their bacon. And I highly doubt any country will let one of their major banks fall, since the Yanks are breaking their own rule, that they've been lecturing other countries about and propping up banks. Although, letting a small one go is very possible.

[pocariboy73]

The major banks such as KB, Woori, KEB, Shinhan, and Hana likely have enough assets and backing to make it through the crisis. But the small regional banks, such as Tomato, come on now.... All I'm saying, those small banks, if any, would be the first to fold if the crisis were to escalate to that point. Then, have fun dealing with the government about the banking insurance. No doubt they'd pay, but the lengthy and stressful process associated with it is something I'd rather do without.

[seosan08]

duplicate post-whoops!

[seosan08]

duplicate post-whoops!

[seosan08]

Korea may not have much exposure to the subprime crap, but the Korean market is the most highly levered market in Asia. There is still the possibility of huge losses in a hugely crashing market. Smart money is staying in cash and gold right now. Personally, I'm staying in cash and I'm going to see how the dust settles before I go making any market forays. The market has a ways to go down before that happens tho.

http://in.reuters.com/article/domesticNews/idINSP2552720080926?sp=true

ANALYSIS-Asia's banks may be less pristine than assumed
A LEHMAN IN KOREA?

Bank of East Asia, which has denied rumours of financial stress, appears to be an isolated case.

Most banks in Asia have said they have very limited exposures, if any, to collapsed U.S. bank Lehman Brothers (LEHMQ.PK: Quote, Profile, Research) or mortgage giants Fannie Mae (FNM.P: Quote, Profile, Research) and Freddie Mac (PRE.P: Quote, Profile, Research). (For related FACTBOX, click [ID:nMAN200913]

That said, one year into the global credit crisis, investors are jittery and ready to sell at the slightest negative news.

South Korea is most vulnerable, analysts say, with a banking sector that is excessively leveraged, inadequately funded and exposed to a struggling property market.

Any signs of distress in the system could set off a chain of capital outflows, instability and brutal currency selling -- a mirror image of Wall Street's crisis.

Construction company bankruptcies in Korea shot up to 254 in the first eight months of 2008, the number of unsold homes is rising and consumer debt is high. Last year, household debt hit 82 percent of GDP and was 148 percent of disposable income.

If the assets side of Korean bank balance-sheets is starting to look worrisome, the liabilities side offers little comfort.

The loans-to-deposits ratio is at an alarming 139 percent as banks lent money at a staggering pace during the boom years from 2002 to 2007, even as Koreans increasingly ploughed their savings into property and stocks rather than bank deposits.

The loans-to-deposit ratio of the four biggest Korean banks -- Kookmin Bank (060000.KS: Quote, Profile, Research), Woori Investment & Securities 006940.KS, Shinhan Financial Group (055550.KS: Quote, Profile, Research) and Hana Financial Group (086790.KS: Quote, Profile, Research) -- ranged between 135-177 percent in the first quarter of 2008, Moody's Investors Service said.

Analysts suspect the past year must have been painful for banks as they became increasingly reliant on wholesale funding and overseas borrowings even as the crisis made dollar funds scarcer and costlier.

Korea's total short-term debt is estimated to be around $210 billion, while it has currency reserves of $243 billion, so in theory Korea is more liquid than during the financial crisis.

[Trevor]

Yea, I'm sticking with KB despite the fact that Tomato is .8% higher. You WILL get your money back if they go bankrupt, but I imagine the anxiety would be unbelievable.

6.2% is okay with me and KB isn't going anywhere. At least not without a warning.

[Trevor]

Well, now, when you say "cash" do you mean a checking account or your mattress? A checking account at KB is no more safe than a CD. You are protected up to 50,000,000 for both.

[cobright]

[antoniothegreat]

besides the secutrity and the rate, one thing to look at is the potential fees. My Korean wife has some money tied up in a CD. If she pulls it out early, she suffers a 50% fee. yeah. so if she put 5 million in the bank 18 months ago on a 2 year cd, if she withdrew the money, she would LOSE 2.5 MILLION WON.
make sure you understand everything...