S. Korean banks vow to share 'pain' after rescue plan

SEOUL, Oct. 22 (Yonhap) -- The heads of banks in South Korea said Wednesday they will make voluntary efforts to share some of the financial "pain" in return for the country's foreign debt guarantee.

The chiefs of 18 lenders, including state-run banks, said they will cut salaries
of executives and seek to freeze wages to employees.
They also said they will increase loans to smaller companies facing liquidity
shortages amid the global financial rout, and extend maturities of household
loans.
On Sunday, South Korea said it will guarantee US$100 billion worth of foreign
currency debts owed by local lenders and offer $30 billion to the cash strapped
institutes as part of efforts to help ease a liquidity shortage.
The South Korean government said Tuesday that it will closely monitor any
potential moral hazard stemming from banks seeking to take advantage of the
government debt guarantee.
President Lee Myung-bak also urged local lenders to share some of the "pain" in
return for the state's foreign debt guarantee.
Kookmin Bank, the country's leading lender, said its executives would return 5
percent of their salaries to the company next year.
Despite foreign reserves of almost $240 billion, South Korea has been seen as
vulnerable to the world financial turmoil because of increased short-term foreign
borrowing by its banks.
Global rating agency firm Fitch Ratings affirmed South Korea's credit rating at
A+, saying the financial-rescue package was "sufficiently focused and affordable
to be consistent with Korea's current sovereign ratings."