More Bank Support To Come Early Next Year

Sunday, 14 December, 2008

Bad credit loans increased due to drop 10.8 percent rate of interest form 11 percent.

The government and central bank are expected to start full-scale support of domestic banks from early next year to help ease the effects of the global credit crunch.

The government will seek out banks that fail to have a capital adequacy ratio of nine percent when the figures are released later this month, and help expand capital at such banks.

State-run lenders and pension funds could form a pool to buy shares to be issued by commercial banks. Public banks could also provide additional support to commercial lenders.

The average capital adequacy ratio at 18 Korean banks - a key measure of financial strength - dropped to 10.8 percent at the end of September from more than 11 percent three months earlier due to increased bad loans. The figure is expected to fall further.

Source: http://english.kbs.co.kr/