4 savings banks suspended for lack of sufficient capital
Financial regulators Sunday suspended operations of four savings banks for their failure to meet the capital adequacy ratios recommended by the Bank for International Settlements (BIS) standards.
They are Solomon Savings Bank, Mirae Savings Bank, Korea Savings Bank, Hanju Savings Bank, the Financial Services Commission (FSC) said.
It is the second time since September that the financial watchdog has suspended savings banks. The FSC suspended 16 savings banks last year for their heavy debts and insufficient capital adequacy ratios in an effort to overhaul the ailing industry.
The four banks are among six which escaped suspension in September on condition they take measures to normalize business.
The two others used the grace period to successfully normalize business through capital increase, attraction of foreign capital and sale of affiliated companies.
Financial regulators sent officials to the four banks early in the morning to take measures to suspend them, just one day after they made a decision to that effect Saturday.
The four either have less than 1 percent of the capital adequacy ratios stipulated by the BIS standards or have more debts than assets, the officials said.
The four banks were ordered to suspend business operations for at least six months and appoint a new manager and increase the capital adequacy ratios to 5 percent through paid-in capital increase.
Otherwise, they will face liquidation.
The Korea Deposit Insurance Corporation may take measures within 45 days to liquidate the four savings banks by disposing of their debts and assets or transfer their debts and assets to a bridge bank for early resumption of their operations.
Current law guarantees depositors get back up to 50 million won ($44,169).
The financial watchdog will allow customers of the suspended banks to recover provisional deposits up to 45 million won starting Thursday.
The watchdog said it will try to find out about any irregularities involving the large shareholders or the management of the four banks before imposing tough penalties.
Meanwhile, the chief executive of Mirae Savings Bank was caught trying to flee to China last week.
Police said they apprehended Kim Chan-kyong late Thursday when he was about to board a boat heading to China at Gungpyeong Port in Hwaseong City, Gyeonggi Province.
Kim has been transferred to the prosecution team probing wrongdoing involving insolvent savings banks.
Major shareholders and executives of the suspended savings banks have already been banned from leaving the country. (Yonhap)