Domestic Financial Institutions Collects Loans From Argentine and Turkey

According to the report, the domestic financial institutions possess the bonds of $104.9 million (193.7 billion won) in Argentine and Turkey who are experiencing the severe economic crisis.

The Financial Supervisory Service (FSS) viewed that the financial chaos in these countries will prolong for a while, and in the worst case, it will possibly cause the financial crisis in neighboring countries, and it directed the domestic financial institutions to immediately establish the preventive measures.

The FSS declared yesterday that as of the end of March, the domestic financial institutions are holding the bonds of $82.8 million in Argentine, and the bonds of $22.1 million in Turkey.

This amount of bonds is much lower than the amount that the domestic financial institutions were holding in Thailand ($1.85 billion), Indonesia ($2.79 billion), and Russia ($1.42 billion) during the last money crisis. But the experts point out that the severe results will be generated if the economic crisis in the Central and South America spreads into the whole world.

By content, the loans to Argentine were mainly comprised of loans on mortgage-backed security to the Korean residents in Argentine, and the securities were mostly the government bonds. And the loans to Turkey were largely comprised of the power plant construction funds that the domestic banks lent, the loans to support the funds for the imports of the Korea`s export goods, and the government bonds.

The domestic banks are recently collecting the loans to these countries in ways to avoid the new investment to the national bonds of these countries, and to restrict the extension of the matured loans.

The K bank who retained the bonds of $22 million in Argentine collected $4 million among the Argentine`s national bonds of $9 million thus far this month. And the H bank possessed the Argentine`s national bonds of $49 million as of the end of March, but it sold $6.5 million on 11th, and plans to sell the rest of the national bonds through the American brokers. The J bank who lent the power plant construction fund of $54 million to Turkey plans to convert to the loans guaranteed by the Turkish government in November 2003 when the loans are due.

An official of the FSS told that ``because the foreign money holdings have increased to a great extent since the money crisis, and the capacity to prevent another money crisis has also grown, there will be no big impact``.

Lee Hoon dreamland@donga.com