SEOUL, KOREA- As Tongyang Securities was unable to offer any convincing plan for the group's liquidity crisis, it is facing a major run on its deposits by skittish investors. Although the company and the Financial Supervisory Service persuaded on September 24 the investors that their money will be safe, it was not enough to talk them into going home.
According to the financial regulator, the amount of money withdrawn on the whole days of the 23rd and up to 3 pm on the 24th would be in the range of 2 trillion won. It is estimated that the withdrawal balance will soon surpass the 3-trillion-won level unless something is done about it. Financial Services Commission chairman Shin Je-yoon said on the same day, "There is no reason for customers to be panicky because Tongyang Securities is a blue-chip company." But it could not stem the tide.
Tongyang Securities, jointly with the Financial Supervisory Service, published a statement that there is little problem for the company to survive except damages to its reputation that will affect its ability to attract future customers even if 8 to 9 trillion won of deposits are withdrawn in the form of 2 trillion won of CMA account balance and 5 trillion won of customer deposits.
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