State-run banks to receive W1.4tr injection

[THE INVESTOR] The government will inject 1.4 trillion won (US$1.23 billion) into state-run banks closely involved in shipbuilding and shipping industries’ restructuring.

According to the supplementary budget plans approved by the Cabinet on July 22, the Korea Development Bank will see injection of 400 billion won, and the Export-Import Bank of Korea will get 1 trillion won.

The government estimates that state-run banks, including KEXIM and KDB, need to secure as much as 8 trillion won for the ongoing industrial and corporate restructuring efforts. 

For KEXIM, the 1 trillion won injection will allow it to raise its BIS capital adequacy ratio. Although the bank aims to maintain the ratio at above 10.5 percent, figures for the first quarter of the year showed that KEXIM’s capital adequacy ratio had fallen to 9.9 percent.

In addition, the government plans to spend 100 billion won of the supplementary budget to cover the costs of 61 ships government agencies will order as part of the efforts to shore up South Korea’s ailing shipbuilding industry.

By Choi He-suk (cheesuk@heraldcorp.com)