6 Banks to Be Ordered to Scrap Stocks

6 Banks to Be Ordered to Scrap Stocks

By Park Sang-sooStaff Reporter

Six banks _ Hanvit, Seoul, Peace, Kwangju, Cheju, and Kyongnam _ will likely have to scrap their stocks before they receive taxpayer funds.

Sources at the Financial Supervisory Commission (FSC) said yesterday that in a meeting today, the financial regulator will decide to ask the Korea Deposit Insurance Corporation (KDIC) to agree on the six banks' request for a combined 7.1 trillion won in public money, while ordering them to fully reduce their capital to zero, which will make the existing stocks garbage.

The six banks, which will be designated as ``ailing'' financial institutions by the FSC, will receive enough public money so that they can recapitalize themselves and meet their capital adequacy ratio to more than 10 percent, the sources added.

As part of the measures to protect the interests of minority shareholders at the six banks, the regulator is also considering a measure that will give them priority in purchasing new shares that will be issued later.

The government will funnel public money, totaling 7.1 trillion won, into these banks in two installments, after closely examining the quality of their assets and liabilities.

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