Local banks' overseas borrowing soars this year

(ATTN: RECASTS headline, lead, para 2)
SEOUL, May 19 (Yonhap) -- South Korean banks' overseas borrowing with a maturity
of over one year surged this year from six months earlier as a global credit
crunch eased, the financial watchdog said Tuesday.
A total of 12 local lenders have raised US$12.06 billion through foreign loans
and overseas bond sales so far this year, compared with the $4.85 billion
borrowed in the second half of 2008, according to the Financial Supervisory
Service (FSS).
"The gains came as commercial banks succeeded in issuing debts after the
government successfully sold currency stabilization bonds in April," the FSS said
in a statement.
Local banks, saddled with high overseas short-term borrowing, had been suffering
from dollar shortages in the wake of the collapse of Lehman Brothers Holdings
Inc., sparking concerns they may face difficulty in meeting financial needs and
servicing their debt.
But South Korea's foreign currency liquidity situation has recently improved as
local banks beef up efforts to borrow from overseas and the country's current
account balance remained in the black.
In April, the government issued $3 billion in dollar-denominated currency
stabilization bonds, the first state debt sale since November 2006.
The FSS said that it will urge local banks to make efforts to increase mid- and
long-term foreign borrowing as conditions are improving.
On Friday, Chin Dong-soo, chairman of the Financial Services Commission,
cautioned against local lenders' heavy dependence on short-term overseas
borrowing. He said that the ratio of mid- and long-term overseas borrowing to
lending will be upgraded to 110 percent from the current 80 percent in an effort
to enhance the foreign currency funding structure.
sooyeon@yna.co.kr
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