Korea Exchange Bank seeks to be ¡®clean¡¯

Korea Exchange Bank is expected to move quickly to become a clean bank.

A bank spokesman said on August 6 that Wirgen Lemer, executive director of Commerz Bank, the largest shareholder of the bank, suggested to the government a plan to raise the Korean bank`s capital adequacy ratio to over 10% by the year¡¯s end.

The official said that Korea Exchange Bank`s non-performing assets are estimated at about 5 trillion won. He noted that assets amounting to 2 trillion won were subject to sale because the bank can handle 1 trillion won internally and already has set aside nearly 2 trillion won as a loss reserve.

The clean-bank plan calls for setting up a corporate restructuring vehicle as a separate firm and selling the non-performing assets at 40% to 50% of their book values under the guarantee of Commerz Bank. Under the proposal, the government and Commerz Bank might jointly finance the 50% to 60% loss or relax regulations so that the bank could make up the loss over the next 6-10 years.

The bank official said that a detailed plan would be available by the end of August at the latest in order to recover the bank`s credibility in the market.