Gov"t to Support Banks With 2 Trillion WonThe government intends to supply 2 trillion won to commercial banks by buying bonds which the banks will issue within this month.
The measure is to improve the financial state of commercial banks which can then raise their BIS (Bank for International Settlement) capital adequacy ratio.
To do so, the government will initially buy a total of 500 billion won worth of bonds which five banks including Kookmin, Shinhan, Hana, Hanmi and the Korea Housing Bank will issue by as much 100 billion won in bonds respectively and 300 billion won worth of bonds by the Korea Exchange Bank.
Additionally, the government will buy bonds from the banks which attained good results lending to small and medium size companies.
A source at the Ministry of Finance and Economy said, ' The government used 21 trillion won in public funds in order to raise the BIS capital adequacy ratio of commercial banks to more than 10% as of September. But additional public money will be needed, because the financial criteria for banks will be fortified next year by the BIS.'
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