Local banks see foreign currency liquidity improve

SEOUL, July 22 (Yonhap) -- South Korean banks' foreign currency liquidity
conditions improved sharply in the first half of the year as the global financial
meltdown eased, the financial watchdog said Wednesday.
Saddled with high overseas short-term debt, local banks had been suffering from
severe dollar shortages since the collapse of Lehman Brothers in September, which
sparked a global credit squeeze.
According to the Financial Supervisory Service (FSS), local lenders refinanced 99
percent of their maturing short-term debt in the January-June period, up sharply
from 50.1 percent in the fourth quarter of last year.
The figure means that banks were able to repay almost all of their short-term
foreign loans due in the first half with new foreign borrowing.
"For the time being, banks will have no serious problems with regard to foreign
currency liquidity positions as overseas borrowing conditions improved," the
watchdog said in a statement. "But the watchdog plans to keep a close tab on the
situation to brace for a possible deterioration of overseas borrowing conditions
as risk factors still linger."
Local banks raised a total of US$14.02 billion through loans and debt sales in
the first half, compared with $4.85 billion in the second half of last year, it
added. A rise in overseas borrowing came as local banks sold bonds worth $11.04
billion in the cited period.
The country's foreign currency liquidity situation has noticeably improved since
March as local banks have been making their own efforts to borrow overseas and
the country's trade surplus is improving.
sooyeon@yna.co.kr
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