Lotte group decides to sell two financial units for restructuring

By Lim Chang-won Posted : November 27, 2018, 11:08 Updated : November 27, 2018, 11:08

[Courtesy of Lotte]


SEOUL -- Lotte, South Korea's fifth-largest family-run conglomerate, announced a decision to sell two key financial units in an effort to realign its structure and strengthen the role of a holding company launched last year by group chairman Shin Dong-bin to enhance corporate governance and consolidate his leadership.

Lotte Corp., the group's holding company, said Tuesday in a statement that it would sell Lotte Card, a credit card company, and Lotte Insurance which controls a large portion of South Korea's calling card market under the low-price online automobile insurance brand name How Much.

The group has yet to make a decision on Lotte Capital, which provides consumer finance services. Under South Korea's fair trade act, a holding company should dispose of financial subsidiaries within two years of its establishment.

In October last year, Shin launched Lotte Corp. and secured firm group-wide control by holding a 13-percent stake in the holding company. The realignment of group structure would be completed after the holding company absorbed more affiliates, including Hotel Lotte.

In February, a district court in Seoul sentenced Shin to two years and six months in prison on charges of bribing Choi Soon-sil, the crony of South Korea's ousted ex-president Park Geun-hye. His sudden imprisonment delayed the initial public offering of Hotel Lotte and other crucial projects, including Lotte Chemical's four trillion won investment through a subsidiary in Malaysia to build a petrochemical complex in Indonesia.

The chairman was released on October 5 when an appeals court suspended his sentence. The group responded with an aggressive plan to reactivate investments, which have been delayed during Shin's eight-month absence.

"It is true that the sale process is proceeding, but because it is in a very early stage, it's premature to judge what conclusion will be finally decided," Lotte Card CEO Kim Chang-kwon said in a message to some 1,700 employees. "At this point, it is most important to find the best buyer" so that Lotte can take a leap and grow in the new era of the Fourth Industrial Revolution, he said, promising to find a buyer who can ensure job security.
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