Saemaeul Geumgo Crisis Subsides... Banks Also Provide 6 Trillion Won Liquidity Support

Han Chang-seop, Vice Minister of the Ministry of the Interior and Safety, visited the Saemaeul Geumgo Gyeohigung Branch in Gyo-nam-dong, Jongno-gu, Seoul on the 6th for an on-site inspection of Saemaeul Geumgo. He held a meeting with Lee Jil-nam, Chairman of the Gyo-nam-dong Geumgo, and other officials. Photo by Dongju Yoon doso7@

The situation of Saemaeul Geumgo, which experienced an unprecedented crisis last week, appears to be gradually moving away from the worst phase and entering a lull. As the government intervened, the bank run (massive withdrawal of deposits) has also calmed down. The banking sector has united to provide liquidity support worth about 6 trillion won.

According to the Saemaeul Geumgo Central Association on the 11th, the outflow of funds continues to decrease. A representative of the Saemaeul Geumgo Central Association stated, "Customers visiting branches to cancel savings and deposits have also decreased, and the atmosphere is clearly different from last week," adding, "The mood changed starting Friday afternoon, and it has improved further since yesterday."

The entry into this lull phase is analyzed to be the result of the government's all-out efforts. As concerns about a bank run spread, Han Chang-seop, Vice Minister of the Ministry of the Interior and Safety, held a briefing in person, and Kim Ju-hyun, Chairman of the Financial Services Commission, visited Saemaeul Geumgo to make deposits and reassure the public. On the 9th, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho held a macroeconomic and financial issues meeting, emphasizing that even deposits exceeding 50 million won are fully guaranteed in case of concerns about the soundness of specific geumgos.

The Saemaeul Geumgo Central Association also took measures such as restoring contracted interest rates and maintaining benefits to prevent the worst-case bank run. The association is promoting re-depositing by offering the same contracted interest rates and maturity benefits as before for savings and deposits that were prematurely terminated between the 1st and 6th, until the 14th.

The banking sector has also supplied more than 6 trillion won in liquidity to Saemaeul Geumgo. The five major commercial banks?KB, Shinhan, Hana, Woori, and NH Nonghyup?along with the Korea Development Bank and Industrial Bank of Korea, signed repurchase agreement (RP) contracts with the Saemaeul Geumgo Central Association. Seven banks entered into RP contracts ranging from 500 billion to 2 trillion won, with over 6 trillion won either already supported or planned to be supported to Saemaeul Geumgo. This action by the banks was in response to the financial authorities' request for cooperation in short-term liquidity support for Saemaeul Geumgo.

The government is tightening its grip further this week to maintain the calming trend. Starting from the 10th, the 'Pan-Government Saemaeul Geumgo Task Force,' composed of officials from the Ministry of the Interior and Safety, Financial Services Commission, Ministry of Economy and Finance, Bank of Korea, Financial Supervisory Service, and Korea Deposit Insurance Corporation, began operations and plans to work on-site at the Saemaeul Geumgo Central Association to continue the emergency response system.

This content was produced with the assistance of AI translation services.