Korea's Bad Bank Mergers- Three Blind Mice

Merger talks for government-owned banks such as Cho Hung Bank, Hanvit Bank and Korea Exchange Bank are slated for next month, just two months before the business of taking deposits changes.

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...

FinanceAsia has updated its subscription model.

Registered readers now have the opportunity to read 5 articles from our award-winning website for free.

To obtain unlimited access to our award-winning exclusive news and analysis, we offer subscription packages, including single user, team (2-10 users), or office-wide licences.

To help you and your colleagues access our proprietary content, please contact us at subscriptions@financeasia.com, or +(852) 2122 5222

Article limit is reached.

Hello! You have used up all of your free articles on FinanceAsia.

To obtain unlimited access to our award-winning exclusive news and analysis, we offer subscription packages, including single user, team (2-10 users), or office-wide licences. To help you and your colleagues access our proprietary content, please contact us at subscriptions@financeasia.com, or +(852) 2122 5222