KorAm, Hana to merge this weekend

KorAm Bank and Hana Bank are to announce a merger this weekend at the earliest.

Also, Cho Hung Bank and Korea Exchange Bank, which will be granted conditional continued operation from the Financial Supervisory Commission, will seek integration with other banks for an independent survival strategy.

Hanvit Bank, Peace Bank, Kwangju Bank and Bank of Cheju, which failed to obtain the FSC's approval for their management improvement plans, are expected to be integrated into a financial holding company.

The FSC announced that it had approved the reorganization plans of both Cho Hung and Korea Exchange banks, as they would meet the 10% BIS-based capital adequacy ratio if their capital increase plans are carried out, although they might have additional non-performing loans with projected corporate liquidations. Still, these banks need to further increase their paid-in capital, get rid of non-performing loans, rationalize management and enhance profitability, according to the FSC.

Hanvit and three other banks are unlikely to realize management improvement plans, so the FSC has rejected their proposals. They are required to submit revised plans by Nov. 22.

The government is expected to pour 6 trillion won of public fund into these banks, which is 1.75 trillion won more than the original projection.

Hong Chan-Sun hcs@donga.com