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Domestic Banks Express Concern Over China’s THAAD Retaliation

By March 9, 2017 at 7:09 am
South Koreans may end up paying for the THAAD (Photo : Chung Sung-Jun/Getty Images)

Domestic banks in Korea are starting to get worried over China's retaliatory measures against the country's deployment of U.S. Terminal High Altitude Area Defense or the THAAD. The banks have fears that China's responses may have a big effect on their businesses.

As reported last Tuesday, five domestic banks in Korea have payment guarantees extended to Lotte's affiliates in China. These banks included the Industrial Bank of Korea, KEB Hana, Woori, Shinshan and the Standard Chartered Korea. The amount reportedly is more than 328 billion won or $285.8 million.

The fifth largest conglomerate in Korea, Lotte has been hit hard in this issue especially in the operation of its business in China. It can be recalled that Lotte signed a deal with the defense ministry to hand over one of its golf course as the area for the anti-missile system as per Korea Times.

In the retaliatory measure of China against Korea, the country closed and suspended the operation of 39 branches of Lotte's retail chain Lotte Mart in the country. This now posed the problem to KEB Hana whose payment guarantees for Lotte affiliates in China is 215 billion won.

According to an official from the said bank, they are yet to conduct meetings in order to come up with decisions regarding the said guarantees. However, the bank is closely monitoring the risks brought about by the issue on THAAD.

Some of the banks think that the effect or the risks coming from the anti-missile system are not really imminent. But even if this is the case, they are still paying attention to the action of China since there is a possibility that it will affect the other Korea firms there.

The banks said that they are putting their effort to monitor its potential impact on small and medium-sized enterprises which do businesses with the Chinese counterparts.

Apart from this, another official of a bank shared that as of now, there is no reported case of China's retaliation among the financial businesses. But the banks in Korea should not be contented with that report and should start thinking to change their strategies in China.

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