S. Korea bank runs cause more suspensions

SEOUL — South Korea suspended operations at four more savings banks on Saturday after runs developed as customers rushed to get at their money despite official assurances the financial sector was secure.

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“…upon the earth distressStrongs 4928: sunoche, soon-okh-ay´; from 4912; restraint, i.e. (figuratively) anxiety: — anguish, distress. of nations, with perplexityStrongs 640: aporia, ap-or-ee´-a; from the same as 639; a (state of) quandary:—perplexity.
Strongs 639: aporeo, ap-or-eh´-o; from a compound of 1 (as a negative particle) and the base of 4198; to have no way out, i.e. be at a loss (mentally):— (stand in) doubt, be perplexed
—Luke 21:25

The move came just days after two other institutions had their activities suspended and state-owned finance groups joined forces with commercial banks to pledge billions of dollars in liquidity for a sector beset by souring property loans.

One of those suspended on Thursday was the Busan Savings Bank, South Korea’s largest in terms of assets.

The Financial Services Commission (FSC) said Saturday it was suspending three affiliates of Busan Savings Bank — Jungang Busan Savings Bank, Busan II Savings Bank and Jeonju Savings Bank — as well as Bohae Bank for six months each.

“Considering recent waves of deposit withdrawals, available liquidity, remaining deposits and capacity to borrow, the FSC concluded that they might face a situation where they are unable to pay customers,” the FSC said.

The freeze may be lifted if the banks recoup their liquidity, it said.

The FSC on Thursday put a six-month block on the operations of Busan Savings Bank and its affiliate, the Daejeon Mutual Savings Bank, and announced steps to support others that may be hit by increasingly precarious-looking property loans.

Busan is the country’s biggest savings bank, with assets worth 3.74 trillion won (US$3.4 billion).

Last month, regulators shut down Samhwa Mutual Savings Bank which became insolvent because of soured property loans.

Woori Finance Holdings Co., South Korea’s second-largest financial group by assets, was chosen on Friday as the preferred bidder for Samhwa being sold by the state-financed Korea Deposit Insurance Corp. (KDIC).

Woori, which beat out two local rival bidders to buy Samhwa, will inject fresh funds worth US$90 million while the KDIC will fill in the bank’s unspecified debts-assets gap.

The FSC said on Thursday that 94 of the country’s 105 savings banks meet capital adequacy standards and it did not expect any more suspensions in the first half of the year.

It was not clear if the three institutions suspended Saturday were among the 11 the FSC deemed to have inadequate capital.

It said state-owned Korea Finance Corp, four major commercial banks and the Korea Securities Finance Corp would supply a total three trillion won (US$2.69 billion) in liquidity to the sector.

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