Korean banks: no joy in sight

Euphoria now surrounds the Korean banking sector following the announcement that Kookmin and Housing & Commercial Bank (H&CB) have reached a successful merger agreement following marathon talks. This euphoria will probably be short-lived, however, because the sector is unlikely to enjoy any recovery in basic operating circumstances. The current situation facing the Korean banks as a whole is depressing, with many of the banks having to face the prospect of increasing levels of non-performing loans to faltering chaebols such as Hyundai, Daewoo and Ssangyong.