Banks urged to fast-track corporate revamp drive

SEOUL, Sept. 23 (Yonhap) -- South Korea's top financial regulator called on banks
to ramp up their corporate restructuring campaign and clear troubled assets
drastically in an effort to raise their financial strength.

Local lenders are under fire for dragging their feet in eliminating distressed
assets from their balance sheets amid signs of an economic recovery, stoking
worries about their financial soundness.
"Recent improvements in economic conditions could render a corporate revamp less
imperative," Financial Supervisory Service Chairman Kim Jong-chang said in a
meeting with local bank chiefs. "But (banks) should step up such efforts to make
their assets more sound."
The ratio of 18 local lenders' bad debts, or loans overdue more than three
months, stood at 1.5 percent against their total lending as of the end of June,
up 0.03 percentage point from three months earlier.
In early August, lenders agreed with the financial watchdog to drive down their
troubled loan rate to 1 percent by the end of this year.
The government has been buying soured assets from banks and companies out of a
20-trillion-won (US$16.7 billion) corporate restructuring fund established in
July.
Top lender Kookmin Bank and five other lenders plan to launch a private debt
clearer later this month by pooling a total of 1.5 trillion won, which will be
used to purchase dud loans.
pbr@yna.co.kr
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