Moody's: South Korean banks get aid

The South Korean government's package of measures to help alleviate pressures affecting South Korean banks will likely be helpful to address uncertainties in the international financial system, especially as they are experienced locally, according to Moody's Investors Service said it report.

The program centers on a government guarantee on external debt of domestic banks of up to $100 billion over a three-year period and the provision of $30 billion of the Bank of Korea's official foreign-exchange reserves to domestic banks to ease the dollar liquidity squeeze.

While the solvency of the Korean system is not currently in jeopardy, the unsettled nature of global financial markets and the unprecedented scope and depth of the global credit crisis make it difficult to assess whether the program will fully restore confidence, the agency said.

However, even with severe and protracted stress, Korea's credit fundamentals will most likely not be swamped as they were in the Asian financial crisis of 1997 and the government's A2 ratings are appropriate, Moody's said.

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