South Korean bank run gathers steam
•February 27, 2011 • 2 Comments
Domin Bank, a savings bank with a capital adequacy ratio below 5 percent, voluntarily decided yesterday to suspend its operations temporarily because of massive withdrawals, becoming the country’s eighth savings bank to close.
The decision took both depositors and financial regulators by surprise since it was the first time that a local bank shut its doors on its own.
Domin Bank, which has six branches in Gangwon, was placed on a watch list last week by the Financial Services Commission. The move triggered a bank run on Domin Bank.
Domin Bank, which has six branches in Gangwon, was placed on a watch list last week by the Financial Services Commission. The move triggered a bank run on Domin Bank.
According to Domin Bank, deposits amounting 31.8 billion won ($28.2 million) were withdrawn since last Thursday, including 18.8 billion won on Monday.
The news of Domin Bank’s temporary closure came as FSC Chairman Kim Seok-dong was visiting Mokpo, South Jeolla, where recently suspended Bohae Savings Bank is located.
“This savings bank was supposed to submit a management improvement plan to the FSC by Feb. 24,” said Kim. “We will now have to review whether [the closure] is even legally O.K.”
Bae Joon-soo, senior FSC deputy director, said, “I think it is legally and morally wrong for a financial firm to do such a thing.”
The financial regulator and the Federation of Savings Banks failed to persuade Domin Bank to resume its operation yesterday.
The bank in notices posted on the doors of every branch said that it had taken the move “as a means to soothe the crisis involving massive withdrawals.”
The notice continued, “We will resume operation after we are reborn as a sound savings bank by increasing our paid-in capital to achieve a capital adequacy ratio of 8 percent.”
Meanwhile, Woori Finance Holdings said it would provide emergency funds to Woolee Savings Bank after a bank run this week. The measure is aimed to “help relieve the bank’s liquidity shortage,” Woori said in the statement.
Analysis from ZH: http://www.zerohedge.com/article/korean-bank-run-spreading-eighth-bank-closes-following-massive-withdrawals
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oh?..you hadnt heard about that?..i see..no matter..continue on..its probably nothing..
401
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