Local banks urged to keep capital adequacy ratio above 10 pct: regulator

SEOUL, April 14 (Yonhap) -- South Korea's top financial regulator advised local
banks Tuesday to keep their capital adequacy ratio, a key barometer of financial
health, above 10 percent to weather the slowing economy.
"Although there is no specific guideline for the ratio, I think it would be
better for lenders to maintain their capital adequacy ratio above 10 percent,"
Chin Dong-soo, chairman of the Financial Services Commission, told lawmakers.
Until the second half of last year, the watchdog had recommended that banks raise
the ratio above 12 percent, Chin added.
The average capital adequacy ratio of 18 commercial and state banks came in at
12.19 percent as of the end of December, up 1.33 percentage points from three
months earlier. The ratio measures the percentage of a bank's capital to its
risk-weighted credit.
His remarks came as the government launched a 20 trillion won (US$15.1 billion)
bank recapitalization fund in late March, which is designed to help banks bolster
their capital bases and increase lending.
Eight banks have received a combined 4 trillion won in capital by tapping the
fund, which is used to buy subordinated bonds and hybrid debt sold by them.
sooyeon@yna.co.kr
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