Deputy Prime Minister Jin Urges ``the Flexible Management at the Level of the BIS Ratio of 6-8 Percent``

Deputy Prime Minister Jin Nyum said yesterday,``Banks doing international business should meet the current capital ratio of 8 percent based on the standard of Bank for International Settlements (BIS). But businesses will be allowed to maintain the ratio at over 6 percent.``

In a lecture to a group of businessmen at Shilla Hotel yesterday, Finance Minister Jin said, ``Although the government urged banks to maintain the BIS ratio to be more than 10 percent by the end of last year in order to secure the reliability of the financial organizations, profitability has dropped because the banks have unduly issued the subordinated bonds to fit the ratio.``

In relation to this, a ministry of finance official said, ``Recently the government has lowered the BIS ratio standard from 10 percent to 8 percent. The government is considering to lower the BIS ratio to 6 percent for the local banks and the small-size banks, which do not deal with the international business.``

Deputy Prime Minister Jin also said, ``The economy will grow by over 4 percent this year. It is not desirable to resort to a budget deficit to boost the economy at this point.

However, the government would continue to pursue tax and financial policies to promote facility investment since some of the domestic businesses’ production is in surplus and there is no large size investment to pull the economic development.``

Along with this, ``the overwhelming outlook is that the U.S. economy will begin to rebound in the fourth quarter of this year or the first quarter of next year at the latest. The Korean economy would recover its potential growth rate of 5 to 6 percent beginning next year, `` said Deputy Prime Minister Jin.

Park Joong-Hyun sanjuck@donga.com