Banks provide fewer loans to smaller firms, self-employed

SEOUL, Jan. 4 (Yonhap) -- Major commercial banks extended fewer loans to smaller
companies and self-employed people in 2008, who were hit hardest by an economic
slump triggered by the global economic crisis, industry sources said Sunday.

Top lender Kookmin Bank and five major banks increased their lending to small and
medium enterprises by 37.7 trillion won (US$28.4 billion) last year, down from a
gain of 50.8 trillion won a year earlier, according to the sources.
At the end of last year, the lenders' outstanding loans to smaller companies came
to 299.3 trillion won, up 14.4 percent from a year earlier.
The sources said three lenders -- Kookmin, Woori Bank, and Hana Bank -- provided
a combined 4 trillion won to self-employed people last year, compared with 7.6
trillion won for 2007.
Market watchers said local lenders were reluctant to lend money to smaller firms
and the self-employed out of fears that such loans may turn sour, worsening their
financial soundness.
The nation's financial authorities have urged banks to bolster their financial
health as a deepening economic slump is feared to result in growing bad loans.
Meanwhile, the sources said banks increased their lending to large companies by
21.4 trillion won last year, 2.5 times the amount of loans provided a year
earlier.
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