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South Korea to inject 1.4 trillion won into state-owned banks

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South Korea to inject 1.4 trillion won into state-owned banks

The South Korean government plans to inject 1.4 trillion woninto state-owned banks involved in restructuring the country's shipbuildingindustry.

The injection is part of the government's proposal worth 11trillion won designed to support the restructuring of South Korea's ailingshipbuilding industry, the country's Ministry of Strategy and Finance said July22.

As part of the budget, Korea Development Bank will receive an injection of 400billion won, while Export-ImportBank of Korea will receive 1 trillion won, The Korea Herald reported the same day.

According to government estimates, South Korean state-runbanks will need to secure up to 8 trillion won for the restructuring efforts. Thetwo policy lenders have been grappling with boosting provisions to counterdeteriorating financials in the ailing shipbuilder and shipping industry in thecountry.

The capital injection should help Export-Import Bank ofKorea raise its capital adequacy ratio, which had fallen to 9.9% in the firstquarter. The lender is aiming to maintain the ratio at above 10.5%.

The government also budgeted 400 billion won to financeguarantee and insurance programs.

As of July 25, US$1was equivalent to 1,137.54 South Korean won.