S. Korean firms can withstand U.S. fallout: watchdog

SEOUL, Sept. 17 (Yonhap) -- South Korea's financial watchdog said Wednesday local financial markets "overreacted"; to the collapse of Lehman Brothers Holdings Inc., adding that South Korean firms have enough capacity to cope with overseas instability.

On Monday, Lehman Brothers, once America's fourth-largest investment bank, filed
for bankruptcy protection, burdened by US$60 billion in soured real estate
holdings. The demise of Lehman sent shockwaves across global markets, with South
Korea's key stock index tumbling 6.1 percent to an 18-month low on Tuesday. On
the same day, the won currency also plunged to a 49-month low against the U.S.
dollar on deepening woes over economic instability following the collapse of
Lehman.

"U.S. financial market jitters could affect the South Korean market
temporarily. But local financial firms have enough capacity to cope with overseas
instability and the impact (of the Lehman demise) should be limited on the local
market," Kim Yong-hwan, standing commissioner of the Financial Services
Commission (FSC), told a radio program.

The watchdog said it will check additional risks of local firms' exposure to
Lehman Brothers. According to the FSC, South Korea's financial companies invested
about $720 million in securities linked to Lehman.

"Local brokerage houses may face possible losses linked to Lehman's equity
linked securities. The watchdog plans to check over further risks," Kim
said.

sooyeon@yna.co.kr

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