Following-up measures of 7 savings banks
With a check of management efficiency, FSC decided to put cease and desist order to 7 mutual savings banks which are Jeil, Jeil2, Prime, Daeyeong, Ace, Parangsae, and Tomato.
The reasons are, first, except for Jeil2, 6 mutual savings banks’ BIS capital adequacy ratio are below criteria which is less than 1% and their debt is bigger than asset.
Regarding of Jeil2 mutual savings bank, BIS capital adequacy ratio is less than 1%, and liquidity deficit is definitely expected because its’ parent company, Jeil mutual savings bank, had a bank run due to suspension of business.
Main financial status of 7 mutual savings banks that has been ordered to suspend business
|
classification |
Jaeil |
Jaeil2 |
Prime |
Daeyeong |
Ace |
Parangsae |
Tomato |
|
Total asset |
33,137 |
10,610 |
12,566 |
6,176 |
9,918 |
4,182 |
38,835 |
|
Total loan |
30,470 |
7,590 |
9.061 |
4,013 |
13,275 |
3,778 |
33,614 |
|
Total reception |
30,553 |
9,853 |
11,328 |
5,909 |
12,796 |
4,142 |
39,776 |
|
BIS ratio |
△8.81 |
△0.63 |
△4.14 |
△9.13 |
△51.10 |
△5.50 |
△11.47 |
|
Net asset |
△2,070 |
118 |
△489 |
△303 |
△3,787 |
△300 |
△4,419 |
(Unit: one hundred million, %)
Main contents of cease and desist order are as follows.
- From 11.9.18 to 12.3.17, suspension of business for 6 months(except for some tasks which are pertained to matured bill)
- Performance of executives’ duties is suspended and designation of administrator (except for Jeil2).
- Achieve BIS adequacy ratio more than 5% by issuing new stocks within 45 days.
FSC notified that there would be capital supports in normal mutual savings banks.
(Applicants): savings banks that are expected to continue their business with more than 5% of BIS capital adequacy ratio and that pass the deliberation by Korea Financial Corporation.
Applicants of TSF
- BIS ratio should be ranged from 5% to 10%.
- Should not be supported by government or Korea Deposit Insurance Corporation.
- Should not be ordered which are relevant to prompt corrective action.
- Should not be large-scale enterprises or savings banks that are under the financial holding company
Criteria of considerations: credit rating of company, optimality of capital, profitability, etc.
(Apply principles): support enough capital to savings banks to achieve 10% of BIS capital adequacy ratio.
|
1. Measures of support ordinary people
□ Focusing on 3 financial products for low-income house-hold in relevant local areas to solve the difficulty problem of financing so that people in low-income class do not have to be suffered.
- Micro-Credit: largely expand the limit of support in local area.
- Sunshine Loan: lead ordinary people-financial companies to expand handling Sunshine Loan
- Seed of Hope Loan: let banks first support relevant local areas and then, manage the results of loan by FSS.
2. Measures of support local mid-sized companies.
□ Extend the period of trust guarantee funds and Korea technology credit guarantee.
*Regardless of total amount of Korea technology credit guarantee, support would be given up to one hundred million-won.
□ Expand loan for stabilizing business of bank of mid-sized company.
*Additional aid up to 3 hundred million-won per one company, give right to reduce interest rate for manager and plus right of 1%p more exemption.
□ Absorb demand of capital which belongs to loan traders using suspended savings banks by local banks.
□ If needed, expand the support of on-lending of KoFC to relevant local banks.
*Due to measure in February, this year, limit of on-lending for local banks increased from 1.4 trillion won to 2.4 trillion won.
Ju Hyun Han (blackhall4@naver.com)
