Hans Merchant Bank is suspended

The government will suspend operations of Hans Merchant Bank, formerly Asian Banking, for three months, from July 21 through Oct. 20, because of its financial trouble.

Some other merchant banks are expected to suffer difficulties in banking businesses, thus accelerating restructuring of the industry.

Before the outbreak of the nation`s foreign exchange crisis, nearly 30 merchant banks were operational in Korea. Now, only seven of them are in normal operation.

The Financial Supervisory Commission ordered Hans Merchant Bank, which failed July 19 to pay four matured promissory notes worth 135.1 billion won, to shut down operation as well as to suspend its executives from performing their duties.

The FSC said that Hans has been suffering a liquidity problem since mid-May and that its financial situation has deteriorated abruptly with massive withdrawal by customers following SPBC`s decision July 14 to cancel its plan to increase the bank`s capital by 33 billion won.

Hans Merchant Bank is the nation`s fifth largest merchant bank with 1.94 trillion won in total assets, 1.9 trillion in liabilities and 1.45 trillion won in customer deposit as of the end of March.