SEOUL, Dec 22 (Reuters) - South Korea's top financial regulator on Monday urged local banks to lend more to smaller companies to ease their cash shortage and to help reduce household debt.
Kim Jong-chang, the governor of the Financial Supervisory Service (FSS), said that the regulatory body planned to 'flexibly' manage its supervision system on banks to help them support small and medium-sized enterprises (SMEs) and households in the face of the global financial crisis.
'The government plans to provide 20 trillion won ($15.60 billion) through setting up a capital expansion fund. We hope (banks) to actively support SMEs based on the fund,' Kim said in a statement before meeting heads of local banks.
South Korea plans to launch the fund in January to help banks replenish capital and encourage them to lend the cash-strapped economy.
Kim said local banks also needed to take steps to ease the household debt burden, saying more trouble for households would also hurt banks, undermining their financial soundness.
Kim said the regulator wanted banks to do it while boosting their capital.
In November, South Korean banks pledged to raise their capital ratios to 11-12 percent from an average of 10.79 percent at end-September, which marked the lowest in 7-½ years.
($1=1282.0 Won)
(Reporting by Cheon Jong-woo; Editing by Tomasz Janowski) Keywords: FINANCIAL KOREA/BANKS (jongwoo.cheon@thomsonreuters.com; +82 2 3704 5665; Reuters Messaging;jongwoo.cheon.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Kim Jong-chang, the governor of the Financial Supervisory Service (FSS), said that the regulatory body planned to 'flexibly' manage its supervision system on banks to help them support small and medium-sized enterprises (SMEs) and households in the face of the global financial crisis.
'The government plans to provide 20 trillion won ($15.60 billion) through setting up a capital expansion fund. We hope (banks) to actively support SMEs based on the fund,' Kim said in a statement before meeting heads of local banks.
South Korea plans to launch the fund in January to help banks replenish capital and encourage them to lend the cash-strapped economy.
Kim said local banks also needed to take steps to ease the household debt burden, saying more trouble for households would also hurt banks, undermining their financial soundness.
Kim said the regulator wanted banks to do it while boosting their capital.
In November, South Korean banks pledged to raise their capital ratios to 11-12 percent from an average of 10.79 percent at end-September, which marked the lowest in 7-½ years.
($1=1282.0 Won)
(Reporting by Cheon Jong-woo; Editing by Tomasz Janowski) Keywords: FINANCIAL KOREA/BANKS (jongwoo.cheon@thomsonreuters.com; +82 2 3704 5665; Reuters Messaging;jongwoo.cheon.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.