S. Korean financial firms' short-term overseas borrowing rises

SEOUL, Feb. 2 (Yonhap) -- Short-term overseas borrowing by South Korean financial
firms jumped in the August-December period of 2009 as the global financial
turmoil eased, central bank data showed Tuesday.
Short-term overseas borrowing by local financial institutions, including banks,
registered a net inflow of US$10.8 billion in the August-December period,
according to data compiled by the Bank of Korea (BOK). It marked a turnaround
from a net outflow of $7.01 billion in the first seven months of 2009.
In October, foreign borrowing reached $4.15 billion, the largest monthly increase
since August 2008 when it amounted to $6.86 billion, the bank added.
The rise came as the global financial meltdown eased, prompting local banks to
tap the overseas market to finance their needs, analysts said.
But the bounceback has also raised concerns about foreign debt, which left local
banks vulnerable to sharp external shocks at the height of the global financial
rout.
Korean banks, saddled with high short-term borrowing, suffered from a severe
liquidity squeeze in 2008 as they were hit by the U.S.-sparked global financial
crisis, fueling concerns about their ability to service their debt.
As of the end of September, the country's overseas debt stood at $397.5 billion,
up 5 percent from three months earlier, the BOK said.
In the third quarter of 2008, the country's foreign debt reached a record high of
$426.13 billion on the back of snowballing overseas borrowing by banks to handle
dollar forwards sold by local exporters.
sooyeon@yna.co.kr
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