Moody's: Liquidity tight for Korean banks

Moody's Investors Service said that South Korea's banks continue to face tight liquidity conditions in both domestic and foreign-currency funding.

"Domestic funding is still available but more costly than a year ago and, at the same time, cross-border funding conditions remain challenging as evidenced by the postponement of several issues and by the ability of the Korean banks to obtain foreign-currency funding only at shorter durations and higher pricing, and with more required collateral," Beatrice Woo, a Moody's vice president/senior credit officer, said in an agency statement.

"Contrary to expectations earlier this year, uncertainty in the global credit markets has not abated, and instead appears to have deepened," Woo said. "Based on several key liquidity ratios, liquidity pressure persists at Korean banks, and our detailed review of the banks' June 2008 results will focus on these ratios."

While acknowledging the increasing rating pressures on the banks, Moody's nonetheless contrasts favorably the system's current credit profile with that which existed leading into the 1997 Asian financial crisis and said the banks are rigorously working to develop existing and new funding sources.

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