SEOUL, South Korea–South Korea's financial services regulator has asked major commercial banks to prepare approximately $4 billion in financing to support credit unions hit by member withdrawals, two banking sources told Reuters.
An official at the Financial Services Commission said told Reuters the commission could not confirm the amount or other details, but it had asked the banks for cooperation in preparing liquidity through repurchase-agreement facilities to aid MG Community Credit Cooperatives (MGCCC).
According to the report, depositors were lining up last week to withdraw funds from a branch of the cooperative after local media reported a rise in non-performing loans tied to real estate projects. The branch, in the city of Namyangju east of Seoul, is due to be closed soon, Reuters said.
Liquidity is Assured
The report went on to note South Korea's top financial authorities has pledged to ensure liquidity at the credit cooperative, which has nearly 1,300 branches, saying in a statement that MGCCC's capital ratio and liquidity far exceeded regulatory ratios and it had sufficient cash-equivalent assets.
“Sharply rising interest rates and a cooling property market have raised concerns about the potential impact on Asia's fourth-largest economy,” according to Reuters.
The report added that South Korea's five major commercial banks have signed or are in the process of signing repurchase agreements with the credit union. Repurchase facilities allow for raising cash in exchange for collateral, such as bonds, Reuters noted.
The Institutions Involved
Woori Bank, Hana Bank, Shinhan Bank, KB Kookmin Bank and NongHyup Bank had been asked to make financing available to MGCCC.
State-run Korea Development Bank and Industrial Bank of Korea are also setting up repurchase agreements with the credit union, according to the Yonhap news agency.
It’s Called Fresh for a Reason. And We Offer Home Delivery. For Free!
The biggest, best and freshest news reporting in credit unions remains free in ’23! Each morning CUToday.info delivers its daily Fresh Today news update offering the latest headlines and breaking news right to your email, with the easy-to-read headlines format allowing you to click on the stories that interest you most in order to learn more.
If you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time—and it’s free!
Please note that after signing up you may need to go to your Spam/Junk folder and mark the morning headlines email as safe. CUToday.info does not provide its list of readers and emails to outside parties, and we will not be contacting you to sell you an extended warranty or sending you any links so you may cash in on an inheritance you didn’t know was coming.
And did we mention it’s free?
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com