The South Korean Financial Services Commission (FSC) has
suspended another seven savings banks, bringing the total to 16
institutions to be suspended this year.

The latest seven savings banks caught in the
net – Jeil, Jeil II, Prime, Daeyeong, Ace, Parangsae, and Tomato –
failed to meet the regulator’s capital adequacy test.

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Jeil II was suspended because its capital adequacy ratio is
below 1% and there is a strong likelihood that the suspension of
its parent company, Jeil, will lead to depositors’ bank runs.

The savings banks have now been suspended for a period of six
months.

The regulator has now concluded stress tests of all of the
sector’s 85 savings banks.

On
14 February, the FSC announced that it wanted to generate KRW20trn
($17.9bn) for a consolidated fund to prepare for potential market
instability and avoid excessive deposit withdrawal.

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