Monday, February 21, 2011

Construction Loan Losses Lead to Bank Suspensions in Korea

Anything in the Asia region is of interest. Any sign of weakness could cause capital to stop flowing into the zone.

Officials Seek To Head Off Bank Run
Although the government will guarantee deposits up to 50 million won, it could take some time before customers of suspended banks to get their money back. The government says it will speed along the process by starting to pay qualifying depositors up to 15 million won of their deposits from two weeks after the suspension, as opposed to the customary three weeks.

Savings banks account for a relatively small portion of the financial sector, making it unlikely their woes to seriously harm the broader economy. Still, the government is trying to head off any systemic risks that could be caused by the ailing banks, and they have continued to assure the public that vast majority of the savings banks are fiscally sound and that overreacting to troubles of a few bad banks will harm everyone involved.

50 million won is 45,000 USD

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