Top financial regulator urges banks to increase loans

SEOUL, April 1 (Yonhap) -- South Korea's top financial regulator called on local banks Wednesday to expand lending in a bid to help the country weather the worst economic slowdown in a decade.

"The watchdog will monitor lenders' monthly lending performances and give
disadvantages to those who failed to meet requirements," Chin Dong-soo, chairman
of the Financial Services Commission (FSC) said in a meeting with bank directors.
Banks need to preemptively raise their capital adequacy ratios and push for
recapitalization in order to bolster the real economy and support corporate
restructuring, Chin said, noting "the injection of about 4 trillion won (US$2.9
billion) capital was in that vein."
The regulator injected a combined 3.96 trillion won in capital to eight lenders
on Tuesday from a 20-trillion won bank recapitalization fund, established to
boost banks' lending capacity.
The new capital was used to purchase hybrid bonds and subordinated debts to raise
the lenders' capital bases.
Local banks have been under fire for their reluctance to extend loans to smaller
companies, which have been hit harder by the global economic slowdown. Banks
remain wary of swelling bad loans smearing their balance sheets.