Credit lines expanded to stem possible bank run
Hundreds of customers try to enter a branch of Busan II Savings Bank to withdraw their deposits, Thursday, after the operations of Busan Savings Bank, its bigger affiliate, were suspended as part of the government’s effort to restructure the troubled savings banking sector.
/ Korea Times photo by Lee Seong-deok
By Kim Jae-won
The government suspended the operations of Busan Savings Bank, the largest savings bank in Korea by assets, and its affiliate Daejeon Mutual Savings Bank, Thursday, citing capital inadequacy caused by mounting insolvent project financing (PF) loans.
Announcing the move, Financial Services Commission (FSC) Chairman Kim Seok-dong said no more savings banks will face suspension in the first half of the year, unless a run occurs on them. Three other affiliates are facing scrutiny by regulators over their financial status
“A great deal of money is required to restructure the savings banks,” Kim said, adding that the National Assembly should act promptly to enable the creation of 10 trillion won in funding. “It will be pivotal in stabilizing the market.”
Once the announcement was made, branches of three Busan Savings Bank affiliates that were not suspended faced thousands of customers who were trying to withdraw their deposits.
About 1,400 tried to make their way into the Haeundae branch of Busan II Savings Bank, an affiliate of Busan Savings Bank.
The FSC decided to expand its emergency fund by five times to 3 trillion won.
“This expanded provision is aimed at calming customers,” an FSC official said. Four banks — Woori, Kookmin, Shinhan and Hana — also opened a credit line worth 2 trillion won with the state-run Korea Finance Corp.
The two savings banks ceased operations for six months immediately after the announcement was made. Customers are provided with government payment guarantees on their deposits up to 50 million.
Complete withdrawals of deposits will be banned with each customer allowed a uniform 15 million won payment.
The suspension of the two leading savings bank came a month after the FSC suspended the smaller Samhwa Mutual Savings Bank in order to weed out unviable players. Samhwa is set to be taken over by a commercial bank.
The trouble facing savings banks is closely linked to the property market slump that started during the 2008 global financial crisis, sharply driving up defaults on loans backed by construction projects.
Daejeon Mutual’s liabilities exceeded its assets by 32.3 billion won as of the end of 2010, the FSC said in a statement.
Its capital adequacy ratio, the key measure of capital strength, was found to be minus 3.18 percent as of the end of last year, far lower than the minimum regulatory level of 1 percent, the financial regulator added.
Busan Savings’ liabilities exceeded its assets by 21.6 billion won at the end of last year, with its adequacy ratio standing at 5.13 percent.
“Daejeon Mutual is in a situation where it cannot respond to depositors’ withdrawal demands due to a liquidity shortage triggered by a recent run on deposits,” an FSC official said.
During the six-month suspension, the Financial Supervisory Service, the executive body of the FSC, will examine both banks to determine whether to allow them to resume operations.
Financial experts say suspensions of the two savings banks won’t be contagious or threaten the financial sector as the size of the bad loans is relatively small. “The combined amount of bad loans of the two savings banks marks about 100 billion won,” said Hwang Seok-kyu, an analyst from Kyobo Securities.
대형 저축은행 두 곳, 영업정지 당하다
정부는 목요일 저축은행 중 자산규모 국내 1위인 부산저축은행과 그 계열사인 대전저축은행의 영업을 정지했다. 정부는 이들 저축은행이 부실 프로젝트 대출의 증가로 인해 적절한 자본 상태를 유지하지 못했다고 말했다.
금융위원회 김석동 위원장은 대규모 예금인출이 없는 한 상반기에는 더 이상의 저축은행 영업정지는 없을 것이라고 말했다.
김 위원장은 또 “저축은행 구조조정을 위해 많은 액수의 자금이 필요하다”며 국회가 10조원 규모의 기금 마련을 위해 조속히 행동에 나서달라고 촉구했다.
그는 “그 기금이 시장을 안정시키는 데 큰 역할을 할 것이다”고 덧붙였다.
부산저축은행의 계열사들의 지점들은 이날 오전부터 수천 명의 고객들이 예금을 인출하기 위해 몰려 들어 북새통을 이루었다. 고객들은 두 저축은행의 영업정지 조치가 계열사들에 영향을 미치지 않을까 염려했다.
부산저축은행 계열사인 부산2저축은행의 해운대지점에는 약 1,400명의 고객이 몰려 예금을 인출해갔다. 부산 덕천동에 있는 이 은행의 본점과 충무동, 남천동 지점에도 수백 명의 고객들이 예금을 찾기 위해 줄을 섰다.
금융위원회는 이들 저축은행 고객들을 진정시키기 위해 비상 기금 규모를 다섯 배 확대해 3조원까지 마련하도록 결정했다.