[EDITORIALS]Equal opportunities are few

Korea First Bank will be taken over by Standard Chartered Bank of Britain, after Newbridge Capital took it over five years ago. During this period, the U.S. private equity fund, which invested 500 billion won ($474.5 million), has gained a profit of 1.15 trillion won, or 2.3 times the amount it invested.
On the other hand, the Korean government, which poured in huge amounts of public money, will lose as much as 5.75 trillion won. A controversy over the “bargain sale” of the bank is unavoidable.
At the time of the foreign exchange crisis in 1997, Korea First Bank became a symbol of Korea’s economic restructuring and liberalization, so the sale to overseas investors was unavoidable. Foreign capital started to flow into Korea and made it possible to overcome the financial crisis.
Some insist that the current level of loss is bearable. After the Standard Chartered sale, however, it is difficult to avoid criticism that the government has leaked national wealth overseas out of its overeagerness to see short-term results. No one is taking responsibility for accepting such disadvantageous conditions as guaranteeing to compensate the bank’s losses for two years after the sale.
What’s more important is that it is time to reconsider the problem of reverse discrimination against Korean investors. The government prohibits Korean industries from being major shareholders of banks, while foreign capitals are free from such regulations.
Due to such reverse discrimination, the managements of Korean banks are monopolized by foreign funds. Korea First Bank, Korea Exchange Bank and Koram Bank are examples. As a result, foreign funds enjoy the privilege of taking Korea’s financial market as its “playground.”
Because private equity funds, not banks, are active in Korea, Korean banks failed to learn advanced financial techniques, and low-income people and small businesses suffer because banks focus on retail loans on a short-term basis.
We don’t want to ban the inflow of foreign capital, but we think domestic funds should be given the opportunity to compete with foreign ones. Discrimination of domestic capital, labeling it as industrial capital or as business conglomerates, must stop.
By giving opportunities to foreign funds only, while denying the same to Korean businesses, we provided the former with chances to make a lot of money. Reflecting on the lesson the Korea First Bank sale has given to us, we must change our discriminatory systems quickly.