Woori Bank to tap bank fund to get 2 tln won in capital

SEOUL, Jan. 7 (Yonhap) -- South Korea's No. 3 lender Woori Bank said it plans to
tap a government-proposed fund aimed at helping boost lenders' capital base in a
bid to raise about 2 trillion won (US$1.54 billion) in capital.
The government is seeking to launch a 20 trillion won fund this month to be used
to buy preferred stocks, subordinated bonds and hybrid debt sold by lenders.
Local banks can tap the fund on a voluntary basis.
"To raise the capital adequacy ratio, we are considering using the fund by
selling about 2 trillion won in hybrid bonds," a senior official at Woori Bank
said. The move would mark the first attempt among local lenders to tap the fund.
The move comes as South Korean lenders are struggling to bolster their falling
capital adequacy ratio, a key barometer of financial soundness that measures the
percentage of a bank's capital to its risk-weighted credit.
Hybrid bonds are securities that combine the properties of debt and equity. If a
lender sells hybrid bonds with a maturity of more than 30 years, the proceeds are
recorded as core capital.
Woori Bank's capital adequacy ratio stood at 10.61 percent as of the end of
September, compared with 10.39 percent three months earlier, according to the
Financial Supervisory Service. Its so-called tier-one capital ratio, a barometer
of a bank's core financial health, came in at 7.64 percent as of the end of
September.
The financial watchdog advised local banks to raise their tier-one capital ratio
to over 9 percent by the end of this month.
"If details about the operation of the fund come out, we plan to apply for the
fund to buy our hybrid debt," he added.
sooyeon@yna.co.kr
(END)