This doesn’t fit with the current perception that East Asian economies are sturdy from a growth and financial perspective.South Korea’s JoongAng Daily reports on a crisis among savings banks, and the fears of a run-on-the-banks that engulfs the entire industry.
More than a thousand customers lined up in front of the Busan II Savings Bank located in Busan yesterday as soon as the nation’s financial regulator announced a six-month business suspension of Busan Savings Bank and its affiliate Daejeon Mutual Savings Bank.
The line formed by depositors extended about 100 meters (328 feet) from the door of Busan II Savings Bank. “You won’t be allowed to withdraw your money if you are just standing there without a queue ticket number,” a bank employee told the crowd using a microphone.
The government is doing its best to calm people, but it’s not working:
“I’ve saved 40 million won ($35,810) over my whole life. That money was going to be used for my grandson’s marriage but I cannot trust these people [bank employees] saying that I am guaranteed to get my money back,” said Cho So-young, 79.
All told, five savings banks have been put on watch for inadequate capital. They’re being bailed-out by larger institutions:
The state-run Korea Finance Corporation and four commercial banks – Woori, Kookmin, Shinhan and Hana – have decided to inject 2 trillion won of emergency liquidity into the savings bank sector.
Just something to keep an eye on right now.