BOK Gov. requests lower bank rates

Chon Chul-Hwan, governor of the Bank of Korea (BOK), requested that banks lower their interest rates further and take a more flexible approach to screening corporate credit.

At a lunch meeting with the heads of Cho Hung, Shinhan, Kookmin and H&CB at the Bankers¡¯ Building in Seoul, governor Chon said that it was essential for banks to play a leading role in stabilizing the recent movements in the financial market and providing companies with funding.

Noting that the importance of profitability in measuring the performance of banks is likely to be stressed more in the future as restructuring has nearly been finalized, governor Chon said that banks, accordingly, seem to have room to lower their interest rates on deposits.

He also said that if banks apply credit screening standards too strictly in order to avoid possible risk at a time when the economy is slowing down, the economic setback could be aggravated, which would generate negative effects such as an increase in their non-performing assets. Accordingly, the governor said, it was desirable for banks to operate risk management in such a way as to cope effectively with the economic situation.