ID :
187631
Fri, 06/10/2011 - 05:37
Auther :
Shortlink :
https://oananews.org//node/187631
The shortlink copeid
Watchdog vows full support for troubled savings bank
SEOUL, June 10 (Yonhap) -- South Korea's top financial regulator will seek every means possible to prop up a local savings bank that is floundering due to massive deposit withdrawals, the regulator's chief said Friday.
Prime Savings Bank has been suffering a bank run since Wednesday on reports that authorities filed a criminal charge against it for extending excessive loans. So far, deposits worth 88 billion won (US$81 million) have been withdrawn, throwing the lender into a liquidity crisis.
"(We) will seek all possible measures ... We will make sure there is sufficient liquidity support (if a liquidity crunch occurs)," Kim Seok-dong, chairman of the Financial Services Commission (FSC), told reporters.
The crisis at Prime Savings Bank comes on the heels of a major bank run that occurred earlier this year, which had posed further risks to South Korea's savings bank sector struggling under a mountain of bad property loans.
In January and February, the FSC suspended operations of eight savings banks, whose asset quality had tumbled on growing defaults on soured project finance loans. The move triggered a rush for deposit withdrawals.
Meanwhile, prosecutors said earlier that they have not found any signs of illegal loans made by Prime Savings Bank via paper companies, unlike Busan Savings Bank Group.
South Korea's savings bank sector has recently been marred by a scandal involving former senior regulatory officials and major shareholders of Busan Savings Bank Group.
Some employees at Busan Savings Bank were accused of tipping off their relatives and VIP customers about its impending business suspension in February so as to help them withdraw their deposits in advance.
The savings bank was later found to have engaged in extending illegal loans to large shareholders and other financial irregularities involving a total of 7 trillion won. Its chairman, Park Yeon-ho, and several major shareholders have been prosecuted.
mil@yna.co.kr
Prime Savings Bank has been suffering a bank run since Wednesday on reports that authorities filed a criminal charge against it for extending excessive loans. So far, deposits worth 88 billion won (US$81 million) have been withdrawn, throwing the lender into a liquidity crisis.
"(We) will seek all possible measures ... We will make sure there is sufficient liquidity support (if a liquidity crunch occurs)," Kim Seok-dong, chairman of the Financial Services Commission (FSC), told reporters.
The crisis at Prime Savings Bank comes on the heels of a major bank run that occurred earlier this year, which had posed further risks to South Korea's savings bank sector struggling under a mountain of bad property loans.
In January and February, the FSC suspended operations of eight savings banks, whose asset quality had tumbled on growing defaults on soured project finance loans. The move triggered a rush for deposit withdrawals.
Meanwhile, prosecutors said earlier that they have not found any signs of illegal loans made by Prime Savings Bank via paper companies, unlike Busan Savings Bank Group.
South Korea's savings bank sector has recently been marred by a scandal involving former senior regulatory officials and major shareholders of Busan Savings Bank Group.
Some employees at Busan Savings Bank were accused of tipping off their relatives and VIP customers about its impending business suspension in February so as to help them withdraw their deposits in advance.
The savings bank was later found to have engaged in extending illegal loans to large shareholders and other financial irregularities involving a total of 7 trillion won. Its chairman, Park Yeon-ho, and several major shareholders have been prosecuted.
mil@yna.co.kr
