The heads of South Korean banks expressed concerns Friday that the current turmoil in the global financial market may lead to difficulties in securing mid- and long-term overseas borrowing, the central bank said.
The Bank of Korea (BOK) quoted 10 chiefs of local banks as saying that local banks have secured a large bulk of foreign exchange liquidity in advance in an attempt to fend off a potential liquidity squeeze.
However, lingering concerns about the global financial markets may make it difficult for them to raise foreign borrowing in the mid-and long term, such as from bond sales.
The remarks came when BOK governor Kim Choong-soo met with local bank heads in a monthly meeting.
The global economic slowdown and the eurozone debt crisis are increasing volatility of global financial markets, prompting local banks to scurry to secure FX liquidity.
South Korea learned a painful lesson about the importance of strengthening banks' foreign currency liquidity after experiencing the 1997-98 Asia-wide financial crisis and the global financial tumult that accompanied it.
At the height of the global financial storm, Korean banks, saddled with high short-term external debt, had difficulties in refinancing foreign currency loans or securing FX liquidity as foreign capital fled the country en masse.