Moody's downgrades S Korean banks' credit ratings

Special Report:Global Financial Crisis

SEOUL, Feb. 9 (Chinese media) -- Moody's Investors Service,

global credit rating agency, said Monday it lowered its credit ratings for eight

South Korean banks due to their reliance on the government to secure funding.

Moody's said it downgraded the foreign currency

long-term senior debt ratings of the eight South Korean banks, including Kookmin

Bank, Shinhan Bank, Woori Bank, Hana Bank, Industrial Bank of Korea, National

Agricultural Cooperative Federation, and state-run Korea Development Bank (KDB)

and Export-Import Bank of Korea, to "A2," same as the South Korean government's

credit rating.

The agency gave a stable outlook for seven financial

firms, while rated KDB's outlook "negative."

"The above rating actions concluded the review

initiated on Jan.15 to consider the appropriateness of the banks' foreign

currency debt ratings vis-à-vis the South Korean government's given the banks'

heavy dependence on government support to secure external funding," Moody's said

in a statement.

In mid January, Moody's announced that it would take

reviews on the South Korean lenders and would bring about possible degrades in

their credit ratings.

The revision in credit ratings is attributed to South

Korean banks' dependence on the government and the Bank of Korea, South Korea's

central bank, for foreign currency liquidity, according to South Korea's Yonhap

News Agency.

With their short-term overseas debt remaining at high

level and the credit markets staying frozen, local banks, which suffer from a

foreign currency shortage, have to turn to the government, Yonhap added.

On the other hand, Financial Services Commission

(FSC) of South Korea reported on Monday that Moody's made the revision not

because the banks' foreign currency liquidity conditions exacerbated, but rather

because there have been changes in the Moody's appraisal methods.

According to FCC's report, Moody's, unlike Standard

Poor's and Fitch Ratings, took into consideration the government's funding

abilities as well, when it evaluated the banks' foreign currency debt ratings.

The downgrade on banks' credit ratings is thus to be

interpreted as a revision to adjust the discrepancy between the government's

credit ratings and the banks', the report added.