Tuesday, February 22, 2011

South Korea's Ongoing Bank Run

"Unrest" of a different kind is found in South Korea, where there is an on-going bank run.

The latest from Korea Times (2/22/2011):

One more savings bank shut down

The nation’s financial regulator said Tuesday that it has suspended one more savings bank reeling from massive construction financing loans defaults.

The Financial Services Commission (FSC) announced it had suspended Domin Savings Bank, based in Chuncheon, Gangwon Province, for six months. The lender closed its six branches there voluntarily earlier in the day for fear of a bank run.

Domin is one of five savings banks that have failed to meet the government’s recommendation of a 5-percent capital adequacy ratio. It saw a total of 18.8 billion won withdrawn, Monday.

Since new FSC Chairman Kim Seok-dong took the helm of the regulator last month, eight savings banks have been ordered to halt operations.

An FSC official said that Domin’s bank for international settlement (BIS) ratio had fallen below 1 percent, forcing the regulator to suspend its business.

Other than the suspension of Domin, the FSC chairman’s all-out efforts to stifle lingering jitters over possible shutdowns of distressed savings banks through mass withdrawals are working, as the chances of bank runs appear to have abated.

Kim visited Mokpo, South Jeolla Province, where the suspended Bohae Savings Bank is based, Tuesday, and continued to prevent an exodus among depositors of the secondary banks, who were alarmed by the financial regulator’s suspension of business of six similar lenders last week.

What is the world coming to?


Post a Comment