February 29, 2024

South Korean Managers Return to Shuttered Plant in North

Sixty factory managers from the South arrived in the Kaesong Industrial Zone, the factory park located in the North Korean border town of the same name, for a day trip to check on their factories idled since the last of them withdrew from there in late April. North Korea halted production there in early April by withdrawing all its 53,000 workers, blaming tensions it said were caused by joint American-South Korean military drills at the time.

The factory managers inspected their manufacturing equipment ahead of the possible resumption of operations. Another batch of South Korean factory mangers planned to make a similar trip to Kaesong on Thursday.

Representatives of the two Korean governments had met on the border over the weekend and agreed upon the factory managers’ trips to Kaesong, but they remained far apart over the terms of reopening the complex. The two sides resumed negotiarltions on Wednesday in Kaesong but again failed to reach a compromise. They planned to meet again on Monday.

Suh Ho, the chief South Korean negotiator, said on Wednesday that North Korea must accept “common sense and international standards” in Kaesong before the complex can be “normalized and further developed.”

South Korea is urging North Korea to take steps to assure that it will not let political and military disputes interfere again with the operation of the joint economic project in Kaesong. Its president, Park Geun-hye, has suggested that one such step would be for North Korea to agree to invite non-Korean factories to Kaesong.

She said in March that “if the Kaesong complex becomes internationalized with foreign factories, North Korea will not be able to do things intolerable under international standards, such as an abrupt travel ban or a sudden tax increase,” actions that she said South Korean firms had suffered there.

Before shutting down Kaesong in April, North Korea had demanded higher wages for its workers and more taxes for South Korean firms there. It also had complained that South Korea’s investments there fell far short of what it had promised when the two Koreas started the joint project a decade ago. But it has opposed inviting foreign investors there, calling such a plan “a criminal plot” to help spread capitalist influence to undermine its socialist political system.

The chief North Korean negotiator, Pak Chol-su, is pressing South Korea to agree to an early resumption of work at the factory complex, citing fears among factory owners that if their plants were not restarted soon, their equipment would soon start deteriorating in the monsoon season.

“It’s raining a lot, and I am worried about the factory facilities,” he was quoted as saying in South Korean pool reports from Kaesong.

During talks on Wednesday, the two Koreas were expected to bicker over the estimated 700 billion won, or about $600 million, in damages that the three-month suspension of operations has caused to 123 South Korean factories in Kaesong.

The South Korean factory managers’ return to Kaesong and the continuing governmental talks were a sign that the two Koreas are easing tensions and edging toward a possible thaw after months of hostile exchanges, which reached a peak when the North threatened to attack the South with nuclear weapons and the South responded with warnings of counterattacks.

The Kaesong complex, where textile and electronic parts companies from the South employed low-cost North Korean workers, started producing goods in late 2004. It is the last remaining toehold for South Korea’s efforts from a previous era to use economic cooperation to help the North open up and move eventually toward the reunification of the peninsula.

But some hard-line conservatives in South Korea have demanded that the government shut the factory park for good. They argue that most of the between $80 million to $90 million paid annually as wages for North Korean workers ended up in the coffers of the North Korean regime, which was building nuclear weapons and running prison gulags.

When it pulled its workers from Kaesong in April, North Korea also blamed United Nations sanctions against its nuclear tests, as well as the joint American-South Korean military drills. It also demanded that South Korea apologize for domestic news media reports that it said insulted its young leader, Kim Jong-un. Those reports quoted commentators as saying that Mr. Kim would not shut Kaesong down because it was an important source of cash for his government.

The move to try to reopen Kaesong is welcome news for some South Korean liberals. They believe that engagement will work better to persuade North Korea to change and give up its nuclear weapons than sanctions and diplomatic pressure.

But Ms. Park’s conservative South Korean government insists that it has no intention of cooperating with the North unless it first changes its provocative behavior. And surveys show that her attitude remains popular among South Koreans after months of bellicose rhetoric from the North.

“We cannot go back to the old ways,” said Kim Hyung-suk, a South Korean government spokesman, about Kaesong.

Article source: http://www.nytimes.com/2013/07/11/world/asia/south-korean-managers-return-to-shuttered-plant-in-north.html?partner=rss&emc=rss

DealBook: Deutsche Bank Posts $795 Million Profit in Third Quarter

The headquarters of Deutsche Bank in Frankfurt, Germany, under construction in 2009.Ralph Orlowski/Getty ImagesThe headquarters of Deutsche Bank in Frankfurt, Germany, under construction in 2009.

Deutsche Bank, Germany’s largest lender, said on Tuesday that profit in the third quarter was essentially flat, as a surge in investment banking revenue offset costs related to the bank’s legal problems and a cost-cutting program.

Net profit in the three months ended Sept. 30 fell to 755 million euros ($795 million) from 777 million euros in the period a year earlier, the bank said. Revenue rose 18 percent, to 8.7 billion euros. The bank reported a sharp recovery in its investment banking unit, which had been battered by the euro zone crisis and regulatory pressure to reduce risk.

Revenue in the investment banking unit rose 67 percent, to 2.5 billion euros, as customers increased trading activity, the bank said.

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Anshu Jain and Jürgen Fitschen, who share chief executive duties at the bank, said in a news release that the environment for banks was still unsettled.

“In the near term, the macro environment remains uncertain, and we will maintain a cautious and risk-focused approach,” they said.

Like most of its peers, Deutsche Bank has been trying to cope with market turmoil caused by the euro zone debt crisis at the same time regulators are putting pressure on European lenders with large investment banking operations.

Proposed European Union rules would compel banks to isolate their retail and lending businesses from risks created by investment banking. Deutsche Bank, which has often earned much of its profit from investment banking, could be among the those most affected if the rules go into force, some analysts say.

The bank, however, also appeared to benefit from reduced tensions in the euro zone in recent months. Fear of a breakup of the euro zone has eased after the European Central Bank said it would buy bonds of countries like Spain, if necessary, to keep their borrowing costs under control.

Deutsche Bank is facing legal proceedings related to allegations of unethical or illegal behavior in recent years. It is among the banks accused of manipulating the London interbank offered rate, or Libor, which is used to set interest rates on trillions of dollars of financial contracts worldwide.

Expenses related to litigation cut profit by 289 million euros in the quarter, Deutsche Bank said. Costs related to a restructuring program, which is intended to make the bank more efficient and less complex, subtracted another 276 million euros.

In September, Mr. Jain and Mr. Fitschen outlined an overhaul of the bank that would include lower profit targets, bigger capital buffers and smaller bonuses for top executives.

Article source: http://dealbook.nytimes.com/2012/10/30/deutsche-bank-records-795-million-profit-in-third-quarter/?partner=rss&emc=rss