ID :
46240
Wed, 02/18/2009 - 15:14
Auther :
Shortlink :
https://www.oananews.org//node/46240
The shortlink copeid
Concerns re-emerge over Korean banks' dollar shortage
SEOUL, Feb. 18 (Yonhap) -- Concerns are again mounting that South Korean banks may face potential dollar shortages as they struggle to repay overseas debts amid soaring dollar funding costs, industry sources said Wednesday.
A number of local banks, including Hana Bank, are putting off raising foreign
funds after Woori Bank, the banking unit of Woori Finance Holdings Co., decided
not to exercise an option for early repayment of foreign debts maturing in 2014.
"The move roiled investors expecting earlier repayments," said Lee Chang-wook, an
analyst at Mirae Asset Securities. "It helped undermine market credibility for
local banks and in turn boosted funding costs."
Lingering concerns of potential dollar shortages at Korean banks were compounded
by Woori's decision and have prompted speculation among investors that the Korean
economy could experience another sharp blow from the ongoing financial crisis,
analysts said.
The deepening global credit crunch, a weakening won and sizable foreign debts
scheduled to mature in March are adding to investors' worries, they said. South
Korea's currency fell to its lowest in two months against the dollar on Tuesday.
According to financial authorities, local banks' foreign borrowing totaled US$125
billion as of end-December. When loans from the government and the Bank of Korea
are excluded from the figure, their foreign debts reached $85 billion.
About $35 billion in foreign debts are scheduled to mature this year, with $18
billion in repayments due before the end of March.
The government has shrugged off such concerns, saying local banks' demand for
dollars has decreased as the amount of foreign debts maturing every month this
year is half that of last year.
Vice Finance Minister Hur Kyung-wook said during a recent radio interview that
South Korea is unlikely to face a liquidity crisis next month as it has
sufficient foreign reserves to cope with any contingency.
"Volatility in the local foreign currency market has recently increased but it is
still excessive to talk about a crisis," Hur said. "Considering the nation will
likely post a current account surplus of around $13 to $15 billion this year and
holds around $200 billion in foreign reserves, it is an exaggeration to raise
concerns over a liquidity crunch," he added.
The official acknowledged concerns about Japanese financial institutions, which
close their books in March, but insisted there would be no March crisis. Local
banks' yen-denominated debts stood at $13 billion as of end-December, around $1
billion of which is due in March, according to authorities.
"The lingering question is whether local banks can raise new funds or roll over
maturing debts," said Chung Young-shik, a researcher at Samsung Economic Research
Institute. "For the time being, concerns of potential dollar shortages at local
banks will continue to roil investors."
A number of local banks, including Hana Bank, are putting off raising foreign
funds after Woori Bank, the banking unit of Woori Finance Holdings Co., decided
not to exercise an option for early repayment of foreign debts maturing in 2014.
"The move roiled investors expecting earlier repayments," said Lee Chang-wook, an
analyst at Mirae Asset Securities. "It helped undermine market credibility for
local banks and in turn boosted funding costs."
Lingering concerns of potential dollar shortages at Korean banks were compounded
by Woori's decision and have prompted speculation among investors that the Korean
economy could experience another sharp blow from the ongoing financial crisis,
analysts said.
The deepening global credit crunch, a weakening won and sizable foreign debts
scheduled to mature in March are adding to investors' worries, they said. South
Korea's currency fell to its lowest in two months against the dollar on Tuesday.
According to financial authorities, local banks' foreign borrowing totaled US$125
billion as of end-December. When loans from the government and the Bank of Korea
are excluded from the figure, their foreign debts reached $85 billion.
About $35 billion in foreign debts are scheduled to mature this year, with $18
billion in repayments due before the end of March.
The government has shrugged off such concerns, saying local banks' demand for
dollars has decreased as the amount of foreign debts maturing every month this
year is half that of last year.
Vice Finance Minister Hur Kyung-wook said during a recent radio interview that
South Korea is unlikely to face a liquidity crisis next month as it has
sufficient foreign reserves to cope with any contingency.
"Volatility in the local foreign currency market has recently increased but it is
still excessive to talk about a crisis," Hur said. "Considering the nation will
likely post a current account surplus of around $13 to $15 billion this year and
holds around $200 billion in foreign reserves, it is an exaggeration to raise
concerns over a liquidity crunch," he added.
The official acknowledged concerns about Japanese financial institutions, which
close their books in March, but insisted there would be no March crisis. Local
banks' yen-denominated debts stood at $13 billion as of end-December, around $1
billion of which is due in March, according to authorities.
"The lingering question is whether local banks can raise new funds or roll over
maturing debts," said Chung Young-shik, a researcher at Samsung Economic Research
Institute. "For the time being, concerns of potential dollar shortages at local
banks will continue to roil investors."
