Korea fund encourages banks to lend more
By Christian Oliver in Seoul

Published: February 25 2009 07:34 | Last updated: February 25 2009 17:13

South Korean banks, whose shares have fallen heavily in recent weeks amid worries about souring loan books, have to the end of the week to apply for funds from a Won20,000bn recapitalisation fund, according to the country’s financial regulator.

The fund, which is due to be launched next month, is intended to catalyse lending to cash-starved small and medium-sized businesses, according to the financial services commission.

Some Won12,000bn ($7.9bn, €6.2bn, £5.5bn) from the fund will be available as soon as it begins running.

“We want our banks to take legitimate risk,” said Rhee Chang-yong, vice-chairman of Korea’s main regulator. “We want our banks not to be so risk-averse.”

Asia’s fourth-biggest economy has been felled by a plunge in demand for its exports and is expected to contract 2 per cent or more during 2009.

Korea’s small and medium-sized companies are vulnerable in an economy dominated by mighty conglomerates, but they account for almost 90 per cent of jobs.

Half of the Won20,000bn fund comes from the central bank. The state-run Korea Development Bank will lend Won2,000bn and public financial institutions such as the national pension fund will put in Won8,000bn.

Woori Bank has confirmed that it plans to seek Won2,000bn. The regulator said other major banks were also sympathetic to the idea. Kookmin Bank and Shinhan Bank would be eligible for Won2,000bn, while the smaller Hana Bank would be able to raise Won1,500bn.

The banks would access the fund by selling preferred stock, hybrid bonds and subordinated bonds to it.

Korea has been at pains to insist that its banking system remains robust by international standards.

Use of the fund is voluntary, restricted only by an injunction that the financing should not be used for mergers and acquisitions.

The regulator and central bank have rejected reports that Korean lenders are headed for crisis in March as a result of an inability to service debts. They insist that the banks can meet all obligations even in extreme circumstances thanks to foreign reserves of about $200bn, the world’s sixth largest.

Tackling the Achilles heel of Korea’s economy, the new finance minister, Yoon Jeung-hyun, said the weak Won could help exports.

“If we manage it well, it could help us overcome the troubles,” he said of the battered currency, which plummeted 25 per cent last year and has slumped a further 16 per cent this year.

His predecessor, Kang Man-soo, tried to pursue a weak Won policy but became the focus of severe criticism when the currency crashed. He spent much of his time in office battling to prop up the currency and Seoul burned through its reserves at an alarming rate.
Copyright The Financial Times Limited 2009

정부가 중소기업에 대출을 하기 위해 공적자금을 조성해서 펀드를 만들었다. 정부기관과 은행권들이 모은 자금이 20조에 달한다. 과연 20조가 중소기업에 전부 들어갈 수 있을지 궁금하다.

현재 한국경제는 수출이 급격히 감소하면서 침체에 빠졌다. 경기침체로 자금이 빠져나가면서 환율은 오르고 있다. 윤증현 장관은 원화가 하락하면 수출이 늘어날 거라고 하는데 과연 그런가? 엔화도 다시 하락하는 추세에서 우리 기업이 일본기업에 맞설 수 있을까?