Six banks told to submit relief plans

The second round of financial restructuring is about to begin. The Financial Supervisory Commission asked six domestic banks, including Hanvit Bank, Peace Bank of Korea, Chohung Bank and Korea Exchange Bank, to submit management improvement plans by the end of September.

It is expected that banks that hardly can sustain operation independently will receive public funds from the government to raise their BIS-based capital adequacy ratios to over 10%. Even if the public funds are poured into these banks, existing customers do not have to worry about deposits or service because the banks will maintain normal operations.

Based on their performances as of the end of June, banks that are evaluated as being unable to operate on their own will be subject to public funding. The FSC ordered Chohung Bank, Hanvit Bank, Korea Exchange Bank, Peace Bank of Korea and Cheju Bank to correct their plans for normalization of operations. Also, it asked Kwangju Bank, which got a notice for correction, to submit a management improvement plan.

These banks are required to submit quarterly reports over the next year and a half.

The FSC is planning to set up a management evaluation committee, which will consist of professors and other outside experts, during September. The panel will screen the appropriateness of the management plans submitted by the banks in October.

If any bank is found to be unable to operate independently, the government will pour public fund into the bank and raise its BIS-based capital adequacy ratio to over 10%. After removing their non-performing assets, the FSC intends to seek restructuring by establishing a holding company. If their self-relief plan is approved, they will survive through independent operation.