Koreans' credit binge has caused trouble for issuers

LG Card had to stop cash advances to its 14 million customers over the weekend in the face of swelling debt.

But it has now been given fresh loans worth 2 trillion won ($1.7bn; �1bn) and an extra year to pay them back.

South Koreans' love of credit cards has become a source of concern as debt has rocketed over the past five years.

The risk to LG Card, and the size of the bailout, meant shares in South Korea slumped on Monday.

The benchmark Kospi index fell 2% with LG Card down 14%, while the South Korean won was down substantially against the dollar.

LG is the fourth card firm to run into trouble and turn to its creditors for additional help.

LG Card is part of the LG Group, one of South Korea's powerful family-controlled chaebols, or conglomerates.

The chaebols have come under pressure in recent years following the Asian currency meltdown of 1997 and the painful restructuring which followed.

Credit crunch

In the wake of the bailout, LG announced on Monday that it was recommencing cash advances.

But it still faces the problem of dealing with the massive debts its customers have run up.

About one in ten of the debts is overdue, and the total borrowed is now almost $23bn.

The trouble is not new. South Korea's government has been pressuring lenders to cut back on introductory offers and tighten credit checks, in the face of debt burdens which average 30m won for every household.

"Local laws have not permitted the development of personal credit history companies," Industrial Research Consultants' Hank Morris told BBC World Business Report.