Lee says financial uncertainties dissipating By Yoo Cheong-mo

SEOUL, Sept. 19 (Yonhap) -- President Lee Myung-bak said Friday South Korea's exposure to risks from global financial market turmoil would be limited due to the country's conservative financial watchdog system.

Lee also said that a steep drop in property prices leading to the U.S.-generated banking crisis is unlikely in South Korea, thanks to conservative lending practices by local banks.

"Global financial market turbulence has led to the disclosure of its uncertainties, allowing us to make predictions about the future," Lee said during a meeting at the presidential office with Park Hee-tae, chairman of the ruling Grand National Party.

"A conservative financial market supervision system is firmly established here and will help the nation minimize damage."

After the global money market was thrown into chaos in the wake of the collapse of top U.S. investment banks earlier this week, Lee ordered his government to deal with the crisis in a calm and transparent manner.

The president noted that Korean lenders' practice of restricting the volume of their real estate loans to less than 40 percent of the actual property value will be effective in averting a U.S.-style financial crisis.

"The U.S. government's role in the private sector is limited. In Japan, financial loans are virtually linked to property market prices," said Lee.

"Korean banks offer loans within the scope of about 40 percent of property market prices. Therefore, financial market problems won't occur even if housing prices fall."

South Korea's real estate market has been in the doldrums over the past year amid the nation's prolonged economic downturn.