Korean Banks Have to Repay Approximately 40 Trillion Won by Next Year

It has been found that six major South Korean banks’ foreign bonds maturing this year or next year are equivalent to a total of 34.51 trillion won (US$30 billion) in value. The six banks refer to the Export-Import Bank of Korea, the Korea Development Bank, KB Kookmin Bank, Shinhan Bank, KEB Hana Bank and the Industrial Bank of Korea. The amount is close to 40 trillion won (US$34.7 billion) when those in the non-banking sector are included in the calculation.

Specifically, the Export-Import Bank of Korea has to repay 2.78 trillion won (US$2.41 billion) this year and 10.98 trillion won (US$9.54 billion) until next year. The amounts are 3.95 trillion won (US$3.43 billion) and eight trillion won (US$6.95 billion) for the Korea Development Bank and the Industrial Bank of Korea has to repay 2.48 trillion won (US$2.15 billion) until next year.

More than 60% of the foreign bonds of the other three mature this year or next year. For example, Shinhan Bank has to repay 4.48 trillion won (US$3.89 billion) until the end of 2017 and the amount is 4.34 trillion won (US$3.77 billion) for KEB Hana Bank and 4.23 trillion won (US$3.67 billion) for KB Kookmin Bank. South Korean financial companies’ total by the end of next year amounts to 38.6722 trillion won (US$33.6 billion).

Under the circumstances, concerns are rising over the likelihood of an interest rate hike by the Fed in the second half of this year and its repercussions in the form of an outflow of dollar assets and the banks’ weakened bond redemption capability. In this regard, the South Korean financial authorities are planning to apply the liquidity coverage ratio to every bank in South Korea from the beginning of next year.