Big Lenders Weary About Secondary Banking Purge

While financial authorities continue to push forward their efforts to clean up Korea’s messy secondary banking sector, it remains to be seen whether they could properly finish what they started, The Korea Times reported. In its latest attempt to purge secondary lenders that were crippled by exposure to the country’s toxic property sector, the Financial Supervisory Service (FSS) suspended the Solomon Savings Bank, Mirae Savings Bank, Korea Savings Bank and Hanju Savings Bank Sunday. This extended the list of savings banks shelved by financial regulators to 20. The financial regulator had arranged the previously suspended savings banks purged, be cut up and absorbed by the country’s biggest commercial banking groups like Woori Financial, KB Financial, Hana Financial and Shinhan Financial. It remains to be seen whether they could push the same process now, when banking groups are expressing reluctance to eat anymore bad apples. The state-run Korea Deposit Insurance Corporation (KDIC) also admits its purse is close to being depleted after spending nearly 16 trillion won on the restructuring processes of the 16 savings banks suspended last year. It would need at least 5 trillion won to restructure the newly suspended four banks, according to market sources. Read more.