Banks’ short-term foreign loans rise

Korean banks’ short-term overseas borrowing rose at a modest pace in March as lenders moved to secure foreign currency liquidity amid lingering global economic concerns, the financial watchdog said yesterday.

According to the Financial Supervisory Service (FSS), the spread on short-term foreign borrowing by local lenders stood at 15.3 basis points, a gain from 8.8 basis points in February. A basis point is 0.01 percentage point.

The spread on mid- and long-term foreign borrowing that matures in five years fell to 190 basis points last month from 246 basis points, according to the FSS.

Local banks refinanced 94.0 percent of their maturing short-term foreign debts through fresh borrowing last month, compared with 65.1 percent in February.

The rollover rate gauges the percentage of fresh overseas borrowing against foreign debts that mature in one year or less. A refinancing rate of more than 100 percent indicates local lenders have acquired more fresh foreign loans rather than refinancing their maturing foreign debts.

The refinancing rate of local lenders’ mid- and long-term foreign debts stood at 113.4 percent, marking the 10th straight month lenders acquired fresh foreign debts, the FSS said.

“Overall overseas borrowing conditions have improved despite some lingering euro zone fiscal woes,” the financial regulator said.

Even if there is another global financial crisis like the one that rocked the world in 2008, local banks should not have much difficulty acquiring foreign exchange liquidity, it added.

Yonhap