ID :
29788
Wed, 11/12/2008 - 21:14
Auther :
Shortlink :
https://www.oananews.org//node/29788
The shortlink copeid
BOK says able to buy subordinated bonds sold by banks
SEOUL, Nov. 12 (Yonhap) -- South Korea's central bank said Wednesday it is
willing to buy subordinated bonds issued by commercial banks through repurchase
agreement transactions to bolster their worsening financial health.
"Bank bonds included in the central bank's repurchase agreement deals encompass
both senior and subordinated debts. If institutions put subordinated bonds on
offer, the BOK can buy them," an official at the BOK said.
The BOK bought 756.4 billion won (US$560.7 million) worth of bank bonds in an
auction on Tuesday, marking the first move for the central bank to include bank
debt in its repurchase agreement transactions. A repurchase agreement allows one
party to sell a security at a specified price with a commitment to buy the
security back at a later date.
The auction came after the BOK decided in late October to include bank bonds and
some special debts as collateral for its open market operations in a bid to
stabilize the market.
Meanwhile, South Korean banks' financial health deteriorated in the third quarter
from three months earlier as their equity capital fell due to higher valuation
losses from securities investment while the percentage of risky assets rose.
The average capital adequacy ratio of 18 commercial and state banks came in at
10.79 percent as of the end of September, down 0.57 percentage point from three
months earlier.
The ratio, a key barometer of financial soundness, measures the percentage of a
bank's capital to its risk-weighted credit. The Swiss-based Bank for
International Settlements (BIS) advises lenders to maintain a ratio of 8 percent
or higher.
All local lenders are obliged to abide by the New Basel Capital Accord, also
known as Basel II, which calls for more rigorous risk and capital management
requirements. The FSS has recently decided to postpone the implementation of
Basel II by one year to 2010.
If a lender sells subordinated debts, proceeds from the debt sale are recorded as
capital, which helps raise its capital adequacy ratio.
sooyeon@yna.co.kr
(END)
willing to buy subordinated bonds issued by commercial banks through repurchase
agreement transactions to bolster their worsening financial health.
"Bank bonds included in the central bank's repurchase agreement deals encompass
both senior and subordinated debts. If institutions put subordinated bonds on
offer, the BOK can buy them," an official at the BOK said.
The BOK bought 756.4 billion won (US$560.7 million) worth of bank bonds in an
auction on Tuesday, marking the first move for the central bank to include bank
debt in its repurchase agreement transactions. A repurchase agreement allows one
party to sell a security at a specified price with a commitment to buy the
security back at a later date.
The auction came after the BOK decided in late October to include bank bonds and
some special debts as collateral for its open market operations in a bid to
stabilize the market.
Meanwhile, South Korean banks' financial health deteriorated in the third quarter
from three months earlier as their equity capital fell due to higher valuation
losses from securities investment while the percentage of risky assets rose.
The average capital adequacy ratio of 18 commercial and state banks came in at
10.79 percent as of the end of September, down 0.57 percentage point from three
months earlier.
The ratio, a key barometer of financial soundness, measures the percentage of a
bank's capital to its risk-weighted credit. The Swiss-based Bank for
International Settlements (BIS) advises lenders to maintain a ratio of 8 percent
or higher.
All local lenders are obliged to abide by the New Basel Capital Accord, also
known as Basel II, which calls for more rigorous risk and capital management
requirements. The FSS has recently decided to postpone the implementation of
Basel II by one year to 2010.
If a lender sells subordinated debts, proceeds from the debt sale are recorded as
capital, which helps raise its capital adequacy ratio.
sooyeon@yna.co.kr
(END)
