S&P removes 7 local banks from watch list

SEOUL, Oct. 31 (Yonhap) -- Global credit appraiser Standard & Poor's Ratings Service said Friday that it has removed seven major South Korean banks from its watch list for credit reviews on recently improved liquidity conditions.

Those banks are Kookmin Bank, Woori Bank, Shinhan Bank, Hana Bank, the Korea
Exchange Bank, Woori Finance Holdings Co. and Shinhan Card Co., S&P said in an
e-mailed statement.
The Lehman Brothers debacle and global financial uncertainties caused businesses
and investors here to secure enough dollars to service debts and pay for business
activities, raising fears of a liquidity crunch. On Oct. 15, S&P placed the seven
banks on its watch list for credit reviews.
"The resolution stems from the Korean government's comprehensive support scheme,
which has largely mitigated concerns regarding the Korean banks' foreign currency
liquidity risk," the agency said.
The move follows the Korean parliament's approval of a support package that
included state guarantees for external debts owed by cash-strapped local banks on
Oct. 30 and a $30 billion currency swap agreement between the Bank of Korea and
the U.S. Federal Reserve on Thursday, it added.
Local currency and equity markets seemed to be gaining stability in the past few
days on the swap deal and the measures aimed at helping thaw the frozen financial
system. The Bank of Korea also recently slashed its key interest rate by a record
0.75 percentage point to 4.25 percent.
South Korea's government is to unveil a wide range of polices, including tax cuts
and fiscal spending, to cushion the impact of the global financial turmoil on its
real economy. The government also plans to announce stimulus measures for its
struggling construction sector, which accounted for around 20 percent of the
gross domestic product.