BOK to help financing of nonbank financial institutions in difficulty

▲ The headquarters of the Bank of Korea (Yonhap)

nonbank financial institutions-financing

BOK to help financing of nonbank financial institutions in difficulty

SEOUL, July 27 (Yonhap) -- South Korea's central bank said Thursday it will swiftly provide liquidity to nonbank financial institutions if they face difficulties in financing.

In its monthly monetary meeting, the Bank of Korea (BOK) amended its loan guidelines to make it easier to lend money to local cooperative banking institutions in case of emergency.

Under the new system, the range of collateralized securities that banks entrust to the BOK for lending is expanded to include bonds issued by public institutions, banks, local governments and blue-chip companies, according to the BOK.

The amendment will allow the BOK to aid nonbank financial companies, such as MG Community Credit Cooperatives, the National Agricultural Cooperative Federation and the National Federation of Fisheries Cooperatives, in a timely manner when they suffer financing problems such as a bank run.

Earlier this month, MG Community Credit Cooperatives saw a sudden rise in deposit withdrawals after data showed its delinquency ratio soared to 6 percent level as of end-June.

The government has created an interagency task force to prevent a bank run.

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