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S.Korea bank capital raisings to total $15 bln by early '09
Reuters - Sunday, December 28
SEOUL, Dec 28 - South Korean banks will have increased their capital by a combined 16.6 trillion won ($12.8 billion) between November and the end of this month and will raise more money early next year to lift capital bases, a regulator said on Sunday.
The Financial Supervisory Service said in a statement that the capital increases would lift banks' capital ratios by 1.38 percentage points to above 12 percent by the end of this year, from a revised 10.86 percent as of end-September.
The numbers are under the Basel II guideline.
"Domestic banks plan to raise capital further by a total of 3.1 trillion won early next year, comprised of 2 trillion won worth of new share issues, 0.8 trillion won of hybrid capital instruments and 0.3 trillion won of subordinated debt, " it added.
If combined, the total of fresh capital between November and early 2009 would come to 19.7 trillion won .
South Korean regulators have advised domestic banks to push their capital ratios above 12 percent to give them room to lend more to cash-strapped companies.
If banks failed to reach the advised level, they would be requested to tap into a $15 billion fund the government is set to launch in 2009 to recapitalise banks. [ID:nSEO228641]
Last Tuesday, the regulatory agency said it would allow banks to increase the issuance of hybrid securities, which have both equity and debt characteristics, to help them beef up their capital bases.
Citibank Korea, a unit of Citigroup <C.N>, would receive $800 million in new capital from its parent, the JoongAng Ilbo reported on Saturday.
Citibank Korea would announce details on the capital increase early this week, a source from the bank said on Friday.
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