ID :
192604
Mon, 07/04/2011 - 04:29
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Shortlink :
https://oananews.org//node/192604
The shortlink copeid
Watchdog unveils steps to overhaul savings banks
SEOUL, July 4 (Yonhap) -- South Korea's financial regulator on Monday announced a package of measures to put the country's ailing savings banks back on track by injecting public funds into viable players.
South Korea has been grappling with salvaging the troubled sector as savings banks have been suffering from deteriorating asset quality due to soured construction loans. The delinquency rate of property-linked loans stood at 20.4 percent as of the end of March, up from 18 percent late last year.
The Financial Services Commission (FSC) said it will launch an inspection of 85 savings banks in July and August, which will focus on their capital adequacy ratios stipulated by the Bank for International Settlement (BIS) standards.
Savings banks, which are expected to maintain capital adequacy ratios above 5 percent will be classified as "normally operating" and will be eligible to receive public funds to bolster their assets.
The FSC said it plans to release additional measures for banks whose BIS ratios stand below 5 percent, adding that no business suspension will be imposed until inspection results are announced in late September. Savings banks with capital adequacy ratios below 5 percent will be requested to receive regulatory advice.
Savings banks whose BIS ratios stand between 3-5 percent will be given up to six months for normalization, while those with BIS ratios of 1-3 percent will be granted up to one year for such efforts.
Meanwhile, savings banks whose BIS ratio comes below 1 percent will be requested to submit plans for normalization. If their plans are approved, the respective savings banks will be given a three-month period for normalization, said the FSC.
The FSC also said it plans to step up support for savings banks customers by easing rules on deposit withdrawal. Customers were previously allowed to withdraw their holdings two weeks after suspension, but the new plan advances this period to four days after suspension.
The country's financial regulators have been stepping up efforts to prop up the struggling sector. They have already agreed to inject 1.4 trillion won (US$1.3 billion) to buy up savings banks' bad property project finance loans and extend the maturity of these loans by up to two years.
The government is also seeking to sell seven troubled savings banks, including top player Busan Savings Bank, whose operations have been suspended since January. It has already sold one suspended savings bank to state-run Woori Finance Holdings Co., the country's No. 2 banking group.
South Korea has been grappling with salvaging the troubled sector as savings banks have been suffering from deteriorating asset quality due to soured construction loans. The delinquency rate of property-linked loans stood at 20.4 percent as of the end of March, up from 18 percent late last year.
The Financial Services Commission (FSC) said it will launch an inspection of 85 savings banks in July and August, which will focus on their capital adequacy ratios stipulated by the Bank for International Settlement (BIS) standards.
Savings banks, which are expected to maintain capital adequacy ratios above 5 percent will be classified as "normally operating" and will be eligible to receive public funds to bolster their assets.
The FSC said it plans to release additional measures for banks whose BIS ratios stand below 5 percent, adding that no business suspension will be imposed until inspection results are announced in late September. Savings banks with capital adequacy ratios below 5 percent will be requested to receive regulatory advice.
Savings banks whose BIS ratios stand between 3-5 percent will be given up to six months for normalization, while those with BIS ratios of 1-3 percent will be granted up to one year for such efforts.
Meanwhile, savings banks whose BIS ratio comes below 1 percent will be requested to submit plans for normalization. If their plans are approved, the respective savings banks will be given a three-month period for normalization, said the FSC.
The FSC also said it plans to step up support for savings banks customers by easing rules on deposit withdrawal. Customers were previously allowed to withdraw their holdings two weeks after suspension, but the new plan advances this period to four days after suspension.
The country's financial regulators have been stepping up efforts to prop up the struggling sector. They have already agreed to inject 1.4 trillion won (US$1.3 billion) to buy up savings banks' bad property project finance loans and extend the maturity of these loans by up to two years.
The government is also seeking to sell seven troubled savings banks, including top player Busan Savings Bank, whose operations have been suspended since January. It has already sold one suspended savings bank to state-run Woori Finance Holdings Co., the country's No. 2 banking group.
