S. Korean banks' financial health somewhat worsens in 2014

The financial condition of South Korean banks has worsened slightly last year from a year earlier due to a sharp rise in risky assets, the financial watchdog said Tuesday.
  

The average capital adequacy ratio at 18 commercial and state-run banks stood at 13.89 percent at the end of 2014, down 0.54 percentage point from the previous year, according to the Financial Supervisory Service.
  

The ratio, a key barometer of financial soundness, measures the percentage of a bank's capital to its risk-weighted credit. The Basel, Switzerland-based Bank for International Settlements, an international organization of central banks, advises lenders to maintain a ratio of 8 percent or higher since late 1992.
  

The FSS said that the on-year increase in the ratio came as a rise in risky assets outweighed an increase in equity capital.
  

The local lenders' risk-weighted assets gained 12.7 percent, or 153.6 trillion won ($138.7 million), over the one-year period, while their equity capital added 7.7 percent, or 13.5 trillion won, from the previous year.
  

Reorganization of the state-run Korea Development Bank and Woori Bank contributed to the growth of risky assets as the former absorbed the Korea Finance Corp., a policy lender, and the latter placed affiliates of Woori Finance Holdings Co. under its wing as part of the Seoul government's privatization plan.
  

Citibank Korea, the local unit of U.S. banking giant Citigroup Inc., is the only lender that has a CAR higher than 16 percent, followed by Shinhan Bank and Kookmin Bank with 15 percent or over. Seven banks including Woori Bank and Hana Bank stood in the 14 to 15 percent band. (Yonhap)