The consumer finance sector in Korea has over the past 12 months entered a period of stress. The economy has been hampered by global uncertainty and by corporate fraud. Non-performing loans are on the increase as Korean consumers find themselves overleveraged and their employment under threat. It doesn’t make good reading for the credit card companies and the consumer credit industry as they seek ways to finance the burden. However, one company stands out.
Samsung Capital is the most experienced capital-raising consumer finance company in the country. In the past year it added to its tally of three international cross-border securitization deals with two more. And what is equally impressive and definitely seems to be working as a strategy is that the company continues to spread its business around, awarding mandates to banks that have specific skill sets for specific deals. For example, its first international public $296 million auto-loan asset-backed securitization in May 2002 was mandated to Merrill Lynch because of its US distribution and experience with such public bond offerings. Samsung followed this successful deal by mandating ING to launch a $200 million conduit deal: a structure very familiar to the Dutch bank.
The only criticism levelled at the corporate is that it is not particularly innovative and rarely wants to use new methods to get its deals away. But other bankers are quick to defend its approach. They claim that when the markets are as volatile and unsure as they are now, Samsung Capital should be more inclined toward certainty and quick execution rather anything too fancy. As one observer says: “It has a lot of experience and it knows that at the moment straightforward deals are what the investor wants. It doesn’t want to sit around for six months discussing ways of making a deal overly complicated. It wants to raise the capital now.” So far that is exactly what is has been able to do.
