Large sections of Korea's recovering bank sector are exposed to the liquidity problems facing Kumho Asiana Group, which were revealed over the Christmas period after several weeks of stock market rumours.
Last week, Korea's Financial Supervisory Service FSS estimated that the country's financial institutions were exposed to W15.7 trillion $13.5 billion worth of Kumho Asiana debt, made up of W10.1 trillion in loans, W1.2 trillion in debt securities, and W4.4 trillion in other instruments.
And, argued Moody's Investors Service in a statement on December 31, the ultimate loss to Korea's banking sector could well exceed the FSS estimate on the banks' credit loss provisioning of W1.2 trillion, if the group's restructuring plan does not play...
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