Korea is pushing ahead with the merger of government-owned Cho Hung Bank, Korea Exchange Bank and Hanvit Bank out of concern that there may be deposit runs at weaker banks from September.
ôThatÆs because from January 2001, bank deposits will no longer be fully guaranteed,ö explains Simon Maughan, head of Asia-Pacific Banking Research at Lehman Brothers.
Most deposits in Korea are kept in short-term tenures, such as three-month funds. Koreans are, therefore, likely to start transferring their money into stronger banks from September, as any deposits tied up after that date would not be fully guaranteed.
In the first four months of the year, Korean banks gained a total of W40...