ID :
45730
Sun, 02/15/2009 - 21:23
Auther :
Shortlink :
https://www.oananews.org//node/45730
The shortlink copeid
Nine banks likely to tap `bank fund`
(ATTN: RECASTS headline, lead; UPDATES with more details throughout)
SEOUL, Feb. 15 (Yonhap) -- South Korea's top financial regulator said on Sunday
nine local banks are expected to tap a proposed bank recapitalization fund, which
would help raise their capital bases and increase lending to cash-strapped
smaller firms.
"In principle, nine banks expressed their intentions to use the bank fund," Chin
Dong-soo, chairman of the Financial Services Commission (FSC), said after a
meeting with nine heads of lenders and the chief of the Korea Federation of
Banks.
They are top lender Kookmin Bank, Shinhan Bank, Woori Bank, Hana Bank, Citibank
Korea, state-run Korea Development Bank, Industrial Bank of Korea, Kwangju Bank,
and the National Agricultural Cooperative Federation.
The financial watchdog is seeking to set up a 20 trillion won (US$14.2 billion)
fund in the first quarter to help local banks raise their capital base. The fund
will be used to buy subordinated bonds and hybrid debt from lenders.
Local lenders have faced conflicting pressure to increase lending to small and
medium enterprises (SMEs) while raising their falling capital adequacy ratios, a
key barometer of financial health.
The government has said that local banks can tap the bank fund on a voluntary
basis, but they are wary of using it due to fears it may tarnish their
credibility.
The FSC said it plans to announce details of the recapitalization fund this week,
and as part of such plans, it will start with a fund worth about 5 trillion won.
Sunday's meeting comes as local banks have been reluctant to extend loans to
households and smaller firms because the slumping economy and the credit crunch
are increasing the amount of bad debt, hurting their financial health.
South Korean banks saw their fourth-quarter earnings sharply fall, with some even
posting net losses as they put aside more money to brace for the economic
downturn and subsequent corporate restructuring.
Local banks' lending to SMEs dipped by 1.8 trillion won in December before
increasing by 3.1 trillion won in January, according to data compiled by the FSC.
"The chiefs of banks said they will increase loans to SMEs in response to the
government's recent plans to raise debt guarantee capacity by state-owned credit
guarantee agencies," Chin added.
On Thursday, the FSC said the government will provide loan guarantees of up to
64.3 trillion won to about 550,000 SMEs.
According to the watchdog, local banks agreed to roll over all loans due during
2009 and pledged to provide loans to smaller firms, given that the use of the
recapitalization fund and would-be expansion of state credit guarantee will help
their efforts to limit their falling capital adequacy ratio.
The average capital adequacy ratio of 18 commercial and state banks came in at
10.86 percent as of the end of September, down 0.5 percentage point from three
months earlier.
sooyeon@yna.co.kr
(END)
SEOUL, Feb. 15 (Yonhap) -- South Korea's top financial regulator said on Sunday
nine local banks are expected to tap a proposed bank recapitalization fund, which
would help raise their capital bases and increase lending to cash-strapped
smaller firms.
"In principle, nine banks expressed their intentions to use the bank fund," Chin
Dong-soo, chairman of the Financial Services Commission (FSC), said after a
meeting with nine heads of lenders and the chief of the Korea Federation of
Banks.
They are top lender Kookmin Bank, Shinhan Bank, Woori Bank, Hana Bank, Citibank
Korea, state-run Korea Development Bank, Industrial Bank of Korea, Kwangju Bank,
and the National Agricultural Cooperative Federation.
The financial watchdog is seeking to set up a 20 trillion won (US$14.2 billion)
fund in the first quarter to help local banks raise their capital base. The fund
will be used to buy subordinated bonds and hybrid debt from lenders.
Local lenders have faced conflicting pressure to increase lending to small and
medium enterprises (SMEs) while raising their falling capital adequacy ratios, a
key barometer of financial health.
The government has said that local banks can tap the bank fund on a voluntary
basis, but they are wary of using it due to fears it may tarnish their
credibility.
The FSC said it plans to announce details of the recapitalization fund this week,
and as part of such plans, it will start with a fund worth about 5 trillion won.
Sunday's meeting comes as local banks have been reluctant to extend loans to
households and smaller firms because the slumping economy and the credit crunch
are increasing the amount of bad debt, hurting their financial health.
South Korean banks saw their fourth-quarter earnings sharply fall, with some even
posting net losses as they put aside more money to brace for the economic
downturn and subsequent corporate restructuring.
Local banks' lending to SMEs dipped by 1.8 trillion won in December before
increasing by 3.1 trillion won in January, according to data compiled by the FSC.
"The chiefs of banks said they will increase loans to SMEs in response to the
government's recent plans to raise debt guarantee capacity by state-owned credit
guarantee agencies," Chin added.
On Thursday, the FSC said the government will provide loan guarantees of up to
64.3 trillion won to about 550,000 SMEs.
According to the watchdog, local banks agreed to roll over all loans due during
2009 and pledged to provide loans to smaller firms, given that the use of the
recapitalization fund and would-be expansion of state credit guarantee will help
their efforts to limit their falling capital adequacy ratio.
The average capital adequacy ratio of 18 commercial and state banks came in at
10.86 percent as of the end of September, down 0.5 percentage point from three
months earlier.
sooyeon@yna.co.kr
(END)
