Gov"t is Aggressive in Supporting BanksThe government intends to support banks actively. The government is willing to spend public money also to support newly merged banks including those with good operating records as well as between banks with poor operations.
An official at the Ministry of Finance and Economy said on September 14, 'If the Korea Long Term Credit Bank and Kookmin Bank ask the government to take responsibility for their outstanding debts, the government will take on all their unsecured debts. This means that it intends to also support the merger between banks with good performance records.'
The government had allocated 25 trillion won in budget for the funds to buy outstanding debts from banks. Now it is estimated that about 10 trillion won will be a surplus even after the government buys all outstanding debts from banks.
The government plans to spend this money on the very day when the banks to merge will hold their stockholders' general meetings.
Meanwhile, the government announced on September 14 that it will use 4.53 trillion won in public money for the merger of the Commercial Bank of Korea and Hanil Bank. If the government completes its equity participation in the two banks, its equity ratio will reach 94.7%.
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