Depositor Trust Hurt by CDs Allegations in S. Korea, Rooney Says
James Rooney, Seoul-based chief executive officer of consulting firm Market Force Co., comments on the investigation by South Korea’s Fair Trade Commission of alleged collusion on pricing of certificate of deposit rates by banks and brokerages. He spoke on Bloomberg Television and in a separate interview in Seoul.
On what the probe means for the financial services industry in South Korea:
“It clearly has an impact on the trust the domestic savers will have in their financial institutions. In general, the Korean banks have been better sheltered from regulatory abuse and other kinds of malfeasance than some of their larger brothers in other countries. It’s very distressing to see the breakdown of discipline and proper behavior in the financial sector, especially when the world needs a restoration of confidence in the sector.”
On what implication the probe has for the South Korean economy and society:
“I’m worried the most about confidence from the Mrs. Kim and Mrs. Lees of Korea who supply deposits to these banks. They would be asking, ‘Why would I keep my money in these banks? The savings banks offered me better returns and they’ve gone bankrupt. And the commercial banks are now cheating on their rates. I don’t trust anybody’.”
“You would naturally see a reduction of money supply from the private sector, and therefore shrinkages in the velocity of money and shrinkages in the supply of money into the economy.”
To contact the reporters on this story: Taejin Park in Seoul at firstname.lastname@example.org;
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