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Fitch affirms ratings of 3 South Korean policy banks

Fitch Ratings said July 8 that it affirmed the long-termforeign currency issuer default ratings of Korea Development Bank, andIndustrial Bank ofKorea, with stable outlooks.

The rating agency also affirmed the three South Koreanpolicy banks' short-term foreign currency issuer default ratings at F1+. Inaddition, Fitch withdrew Export-Import Bank of Korea's long-term local currencyissuer default rating of AA as the lender has no plan to issue local-currencydebt in offshore markets.

The three policy banks' ratings reflect Fitch's view thatthere is a high likelihood of government support to the banks if needed, asthey undertake critical policy functions and are state-owned. Legislation alsorequires the government to make up for any losses incurred by the banks thatare not covered by their reserves.

The stable outlooks on the three policy banks' ratingsreflect that of the South Korea sovereign.

The banks' ratings would be affected by any change inFitch's assumptions about their relationship with the South Korean government.They would also be affected by changes to South Korea's ratings.