S Korean state financial firms to release 142 bln U.S. dollars

Special Report:Global Financial Crisis

SEOUL, Dec. 31 (Chinese media) -- South Korea's five state-run financial firms

will release around 200 trillion won (142 billion U.S. dollars) into the market

next year to provide liquidity, the Korea Herald reported Wednesday.

According to the Financial Services Commission (FSC), the five state-run

financial firms will encourage lenders to extend loans of 130 trillion won (92.3

billion U.S. dollars) to households and companies as part of efforts to ease a

credit crunch and boost the nation's economy.

The amount of loan is up 25 trillion won (17.75 billion U.S. dollars) from

this year's total.

The public financial firms will also increase credit guarantees by 14

trillion won (9.94 billion U.S. dollars) to 66 trillion won (46.86 billion U.S.

dollars) next year.

A total of 69.7 trillion won (49.49 billion U.S. dollars) is to be provided

to households and firms faltering from a liquidity pinch, while some 37.6

trillion won (26.70 billion U.S. dollars) is planned for the financially

neglected, including smaller firms, households and students, the FSC said.

The Korea Development Bank (KDB), Korea Asset Management Corporation

(KAMCO) and the Korea Housing Finance Corporation will provide 10.2 trillion won

(7.24 billion U.S. dollars) to buy out bad loans held by commercial lenders and

liquidate corporate and housing loans.

The KDB will also inject an additional 1 trillion won (0.71 billion U.S.

dollars) into bond fund in a bid to provide liquidity and invest 2 trillion won

(1.42 billion U.S. dollars) in local banks to help them raise BIS capital

adequacy ratio.

The KAMCO has set aside 2.7 trillion won (1.91 billion U.S. dollars) to buy

out bad loans held by commercial lenders.

To firms suffering from a temporary liquidity pinch, the KDB and the

Industrial Bank of Korea (IBK) will provide 11 trillion won (7.81 billion U.S.

dollars) and 9 trillion won (6.39 billion U.S. dollars) respectively.

The two state-run banks will also inject 41 trillion won (29.11billion U.S.

dollars) for nurturing growth-engine industries next year, which include

green-growth industries, service industries and new facility investment by SME

enterprises.

The Korea Housing Finance Corporation and the IBK announced they will

provide 5 trillion won (3.55 billion U.S. dollars) and 3.7 trillion won (2.62

billion U.S. dollars) each to support banks to extend new housing loans to

households.

Meanwhile, the Export Import Bank of Korea will provide 11 billion U.S.

dollars (7.81 billion U.S. dollars) in the local forex market to maintain stable

foreign currency reserves and also offer around 44 trillion won (31.24 billion

U.S. dollars) to smaller firms depending highly on exports.