S Korean gov't may halt capital injection into banks

Special Report: Global Financial Crisis

SEOUL, May 7 (Xinhua) -- The South Korean government may stop injecting capital into the local banking system with credit crunch showing signs of improvement, local media reported Thursday.

According to South Korean financial authorities, local banks are capable of boosting their own capital by issuing bonds, new shares, or hybrid securities with progress in funding conditions, South Korea's Korea Herald reported.

Bank officials also said that they are able to raise their capital on their own, thanks to better-than-expected earnings in the first quarter, as well as improvement of Bank of International Settlements capital ratios, according to the Korea Herald.

The management committee of the recapitalization fund late last month started a review to see whether any of local banks that had previously requested for a capital injection, which would be completed by the end of this week, the media said.

"Compared to the situation during the first-phase injection earlier in the year, market conditions have greatly improved and the demand for capital injection has shrank," an official from the fund management committee said.