More savings banks in South Korea could face liquidation as the majority of them are expected to have suffered losses in the first quarter of fiscal 2012, the financial regulator said Thursday.
The combined net loss of 19 local savings banks came in at 299.8 billion won ($276.3 million) for the July-September period, according to the Financial Supervisory Service.
The first-quarter losses came on the heels of the industry’s combined net loss worth 1.16 trillion won logged for fiscal 2011, which ended on June 30. Since last year, the financial watchdog has suspended operations of 20 ailing savings banks due to their poor asset quality.
Joo Jae-sung, a FSS deputy chief for banking supervision, said earlier more savings banks could face business suspension.
Of the tallied banks, two players have recently been ordered by the FSS and the state-run debt-clearer Korea Depository Insurance Corp. to improve their financial health through rights offerings.
“We’ll determine the extent of the overhaul of those two once we get the results from the rights offerings,” said a FSS official.
The capital adequacy ratio, a gauge of financial stability, of most of the tallied savings banks slid further in the fiscal first quarter from three months earlier, except for three players.
The FSS said it will run necessary restructuring procedures so to minimize depositors’ losses as much as possible. (Yonhap News)
koreaherald@heraldcorp.com
