ID :
39074
Tue, 01/06/2009 - 14:33
Auther :
Shortlink :
http://m.oananews.org//node/39074
The shortlink copeid
Banks set to lend more to smaller firms in Q1
SEOUL, Jan. 6 (Yonhap) -- Local banks are forecast to ease their grip on lending
to smaller companies in the first quarter in line with government efforts to
increase a liquidity supply, the central bank said Tuesday.
The index gauging local banks' lending behavior to small and medium enterprises
(SMEs) was minus 16 for the January-March period, compared with minus 26 for the
fourth quarter of 2008, according to a survey of 16 lenders by the Bank of Korea
(BOK).
The lower the reading, the more likely that banks will tighten their restrictions
on lending.
"On the back of government policies to supply liquidity to companies, local banks
are forecast to ease their rein on loans to relatively healthy smaller firms," a
BOK official said.
South Korean lenders have been increasingly reluctant to lend money to companies
and households as the deepening economic slump and a credit crunch are increasing
the amount of bad debt. They are struggling to bolster the falling capital
adequacy ratio, a key barometer of financial soundness that measures the
percentage of a bank's capital to its risk-weighted credit.
The government and the financial watchdog have urged local banks to increase the
capital base, which would help them increase lending to cash-strapped companies
and households.
Despite expected easing of restrictions on lending, South Korean banks think that
credit risks for smaller companies and households, or the likelihood of borrowers
not repaying a loan or debt, are expected to be on the upward trend, the BOK
said.
The index gauging credit risks of smaller companies reached 59 in the first
quarter, up from 56 in the fourth quarter. The first-quarter figure marked the
highest level since the January-March period of 1999 when the central bank began
to compile related data.
The index measuring credit risks of households came in at 31 in the current
quarter, compared with 25 in the fourth quarter, fanning fears over their
worsening capacity to repay debt. It marked the highest point since the third
quarter of 2003 when the index reached 44, the central bank said.
sooyeon@yna.co.kr
(END)
to smaller companies in the first quarter in line with government efforts to
increase a liquidity supply, the central bank said Tuesday.
The index gauging local banks' lending behavior to small and medium enterprises
(SMEs) was minus 16 for the January-March period, compared with minus 26 for the
fourth quarter of 2008, according to a survey of 16 lenders by the Bank of Korea
(BOK).
The lower the reading, the more likely that banks will tighten their restrictions
on lending.
"On the back of government policies to supply liquidity to companies, local banks
are forecast to ease their rein on loans to relatively healthy smaller firms," a
BOK official said.
South Korean lenders have been increasingly reluctant to lend money to companies
and households as the deepening economic slump and a credit crunch are increasing
the amount of bad debt. They are struggling to bolster the falling capital
adequacy ratio, a key barometer of financial soundness that measures the
percentage of a bank's capital to its risk-weighted credit.
The government and the financial watchdog have urged local banks to increase the
capital base, which would help them increase lending to cash-strapped companies
and households.
Despite expected easing of restrictions on lending, South Korean banks think that
credit risks for smaller companies and households, or the likelihood of borrowers
not repaying a loan or debt, are expected to be on the upward trend, the BOK
said.
The index gauging credit risks of smaller companies reached 59 in the first
quarter, up from 56 in the fourth quarter. The first-quarter figure marked the
highest level since the January-March period of 1999 when the central bank began
to compile related data.
The index measuring credit risks of households came in at 31 in the current
quarter, compared with 25 in the fourth quarter, fanning fears over their
worsening capacity to repay debt. It marked the highest point since the third
quarter of 2003 when the index reached 44, the central bank said.
sooyeon@yna.co.kr
(END)
