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S Korea's financial regulator unveils measures to normalize savings banks

07-04-2011 16:51 BJT

SEOUL, July 4 (Xinhua) -- South Korea's financial regulator unveiled Monday a package of measures to normalize the country's ailing savings banks.

The Financial Services Commission (FSC) said in a statement that it will inspect 85 local savings banks in July and August, which will focus on the capital adequacy ratios and the quality of assets.

Savings banks, whose capital adequacy ratios under the Bank for International Settlement (BIS) standards prove to be above five percent, will be classified as normally operating bank, and will receive public funds if they want to get it, according to the statement.

Banks, whose BIS ratios stand between three and five percent, will be granted up to six months for normalization, while those with the BIS ratios staying between one and three percent will be given up to one year.

However, savings banks with the capital adequacy ratio below one percent will be asked to submit plans for normalization, and if their plans are approved, they will be granted three months for normalization.

The FSC said it plans to impose no business suspension until inspection results are announced in late September.

South Korea has been struggling to normalize the ailing savings banks, whose asset quality has been deteriorating amid sluggish real estate markets. The delinquency rate of property-related loans at local savings banks reached 20.4 percent as of the end of March, up from 18 percent three months earlier.

Editor:Wang Xiaomei |Source: Xinhua

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