Major Korean banks asked to prepare $4b to buoy distressed credit cooperative: report

The credit cooperative saw customers withdraw funds last week after reports of a rise in bad loans.

South Korea’s financial services regulator has reportedly asked major commercial banks to prepare US$4b in financing to support a credit cooperative hit by customer withdrawals, reports Reuters, based on two banking sources.

An official at the Financial Services Commission said it could not confirm the amount or other details but said that it had asked the banks for cooperation in preparing liquidity through repurchase-agreement facilities to aid MG Community Credit Cooperatives (MGCCC).

"(Authorities) are closely monitoring the liquidity of MGCCC," the official said, declining to be named due to the sensitivity of the matter.

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Depositors were reportedly lining up last week to withdraw funds from a branch of MGCCC after local media reported a rise in non-performing loans tied to real estate projects.

South Korea's top financial authorities pledged on Sunday to ensure liquidity at the credit cooperative, which has nearly 1,300 branches.

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