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Korea stares into the abyss

Last December, Korea staved off default by a whisker. As the rest of the world dithered, the US banks came up with a rescue plan. It bought time while two heroes emerged to hammer out a deal: Citibank's debt-crisis veteran Bill Rhodes and Mark Walker, one of the toughest lawyers in the business, acting for Korea. The battle was all about bank relationships and the double-edged sword of market forces. Peter Lee reports.


In defence of the Morgan plan

Marketing the deal

Korea's first sovereign bonds

Can Korea pull through?

Editorial: Korean rescue is only a start



On December 22, William McDonough, chairman of the Federal Reserve Bank of New York, summoned the heads of the six biggest banks in the US to a meeting in his fortress-like Federal Reserve building on Liberty Street. With the holidays looming, not all the banks were able to send their chairmen. But it was a pretty high powered group that assembled some hours later: JP Morgan chairman Douglas Warner; William Harrison, vice-chairman of Chase; George Vojta, vice-chairman of Bankers Trust; J Carter Bacot, chairman of Bank of New York; Richard Bloom, senior vice-president at Bank of America; and Alan McDonald, executive vice-president of Citibank. On the agenda was Korea.

The bankers attending that first meeting didn't talk much. They listened. The news was grim. Korea was bleeding more than $1 billion a day in liquidity and hard-currency reserves were below $6 billion. The banks were urged to maintain credit lines to Korea.




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