No further bank runs after suspensions

By Korea Herald
  • Published : May 7, 2012 - 19:52
  • Updated : May 7, 2012 - 19:52
FSS calls for depositors of under 50 million won not to withdraw money from savings banks

No massive deposit withdrawals have been spotted at the regional affiliates of the four suspended mutual savings banks, officials at the Financial Supervisory Service said on Monday.

The suspended banks include Solomon, Korea, Mirae and Hanju.

A total of 34.4 billion won ($10.3 million) was withdrawn as of 3 p.m. on Monday at Busan Solomon and Gwangju Solomon, subsidiaries of the Solomon Savings Bank, the nation’s top institution of its kind, and three branches of Korea Savings Bank, according to financial authorities.

The amount is fairly small compared to the whooping 400 billion won withdrawn from the banks last weekend right after the Financial Services Commission, the decision-making panel of the FSS, announced the suspension of four banks undergoing financial difficulties. 
Depositors read an announcement posted on the suspended Korea Savings Bank’s Gangnam Station branch in southern Seoul on Monday. (Kim Myung-sub/ The Korea Herald)

“The mutual savings bank with the greatest number of withdrawing depositors this morning as of 9:30 a.m. had about 20 visitors. The amount of withdrawals ranged between 200 million won to 700 million won,” said Ahn Jong-sik, head of FSS’ examination department, at a press briefing.

“Although withdrawals are frequent on Mondays, the amount is not different from usual and is rather meager compared to the last three to four days,” he said.

The FSS and the state-run Korea Deposit Insurance Corp. dispatched 140 staff to the suspended banks and 230 to the banks’ affiliates facing concerns of a possible bank run. Authorities also said that the fluidity of the banks is currently no problem.

“Each affiliate holds explanatory sessions twice a week to explain that it is a normally operating and separated mutual savings bank from its mother companies, and about the depositor protection system,” said Lee Hae-seon, head of the FSC’s Consumer Finance & Protection Bureau.

The regional affiliates of Solomon Savings bank including the Busan Solomon posted announcements last weekend that “though it is an affiliate of Seoul Solomon Savings Bank, it is a separate corporation with separate accounts.”

Separate windows for depositors of more than 50 million won are prepared at subsidiaries of the suspended savings banks.

“Depositors of more than 50 million won can more quickly withdraw their deposits. Deposits of below 50 million won amount to about 98 or 99 percent. If they do not withdraw their deposits, the banks will have no problem operating normally,” said Lee.

By Park Min-young  (