S. Korean banks' long-term foreign borrowing rises in 2009

SEOUL, Feb. 11 (Yonhap) -- South Korean banks' long-term foreign currency
borrowing increased last year, bolstered by falling funding costs and reduced
foreign currency lending, the nation's financial watchdog said Thursday.

The ratio of 15 local banks' foreign currency borrowing with a maturity of one
year or longer reached 136.8 percent against their foreign currency lending as of
the end of October last year, according to the Financial Supervisory Service
(FSS).
The October reading was a sharp increase from 105.6 percent, posted at the end of
2008, the FSS said.
The ratio got a boost after the lenders reduced US$11.5 billion in such loans
while expanding their foreign currency borrowing by $9.6 billion during the 10
month period, the regulator said.
"The environment for local banks' foreign currency borrowing improved due to
rising global liquidity and lowering risk averse tendency," the FSS said in a
statement.
A cut-down in funding costs also helped banks raise debts at lower interest
rates, it said.
The spread on South Korea's long-term borrowing was 1.17 percent as of the end of
2009, compared with 3.09 percent a year earlier, according to the watchdog.
Spread referred to extra interest rates added to benchmark rates like yields on
U.S. government bonds or the London Inter-bank Offered Rates.
"The FSS plans to advise lender to utilize the liquidity secured from long-term
borrowing in order to repay short-term debts," or borrowing with less than
one-year maturity, the FSS said.
A flurry of maturing foreign debts roiled South Korea in early 2009 when spiking
spreads stemming from the global financial turmoil shut off local banks from
foreign-currency borrowing.
pbr@yna.co.kr
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