Korean Job Discussion Forums

[wylies99]

02-09-2009 17:41

Ratings for 8 Local Banks Downgraded

http://www.koreatimes.co.kr/www/news/biz/2009/02/123_39219.html
By Yoon Ja-young
Staff Reporter

Moody's Investors Service has downgraded its credit ratings for eight local banks.

The global credit rating agency said it lowered ratings of the Export-Import Bank of Korea, Hana Bank, the Industrial Bank of Korea (IBK), Kookmin Bank, Korea Development Bank (KDB), National Agricultural Cooperative Federation (NACF), Shinhan Bank, and Woori Bank to ``A2,'' equal to the sovereign rating. Export-Import Bank of Korea, KDB, Kookmin Bank and IBK were previously rated ``Aa3,'' two notches higher than the sovereign rating, and Hana, Shinhan, Woori and NACF were rated ``A1,'' one notch higher.

The downgrading means these banks will have to pay higher premiums in borrowing overseas.

Moody's said earlier last month that the banks, as well as Citibank Korea and Woori Finance Holdings, would see their ratings under review for possible downgrades, citing their foreign currency debt ratings, higher than that of the government. Citibank Korea and Woori Finance Holdings maintained their ``A2'' ratings.

``With regard to foreign currency debt ratings, the downgrades reflect Moody's opinion that the banks' ratings should be more aligned with the Korean government's A2 foreign currency bond rating on the basis that the government's ability to support systemically important banks in local currency liquidity is materially greater than its ability to provide foreign currency liquidity,'' Moody's said in a report.

The agency said that while the banks continue to have some access to external funding without government guarantees, the foreign currency liquidity shortfalls of many banks are being met by utilizing various government channels, such as competitive swap auctions.

``Accordingly, given the banks' reliance on government support to secure foreign currency funding during the crisis, Moody's believes it is inappropriate for their foreign currency debt ratings to be higher than that of the government. Therefore, foreign currency debt ratings are best measured and constrained at the A2 foreign currency sovereign bond level,'' it added.

Moody's said that the revised ratings on the banks carry a stable outlook, except for KDB, which has a negative outlook.

It added that it has put Bank's Financial Strength Rating (BFSR) of Kookmin, Woori, Shinhan and Hana Bank on review for possible downgrade.

Despite the downgrade, the stock market remained unrattled. Bank shares rose 0.48 percent, and financial stocks gained 0.45 percent.

[email protected]

[Xuanzang]

Wooo my bank isnt on the list.

[bogey666]

ah yes..

the "rating agencies"

useless PHUCKING piece of sh!t!!!!!!

aren't these the same assclowns that gave AAA ratings to various collaterized debt obligations... aka CDO's that were made up of bundled up mortgages?


yes, of course they are!

I'm shocked no one has pointed the finger at THEM. They have an equal share of the blame for this entire mess.

[GEOM]

To the economically illiterate what does that mean for us?

[bassexpander]

So which is better? A1 or A3?

[bogey666]

basic explanation?

AAA is best.
a1 is better than a3 (I assume) but typically think of it as a US letter grade grading system, with triple A being better than single A.

as to what it means?

well it means higher borrowing costs for the banks in question. Their debt rating is kind of like a FICO, aka consumer credit rating to a regular Joe/Jane.


what was the failure of the so called "credit agencies" in this economic housing crisis?

well - they were convinced/bullied, persuaded, whatever.. by Wall Street and banks/financial institutions that CDO's and some other exotic instruments were in fact, rock solid and "safe" investment vehicles, hence the AAA rating.

AAA ratings are VERY important, because many major money managers worldwide will refuse to buy any bond/investment vehicle which isn't AAA or at least A rated. (this way they can tell their investors how "conservative" they are)

it was the A ratings for CDO's that fueled the demand, which in turn fueled more demand for banks to create and bundle ever more dangerous mortgage pools.

yet they kept being top rated.

someone needs to take Moody's and SP to the woodshed.

[hagwonnewbie]

could mean some more negative movement on the won which is to be expected anyway with this week's outlook in the US economy

[bogey666]

[poet13]

I am on hands and knees begging for the won to hit 1400. I'll swap 50K US for won, and buy 10mill Time Deposits. Hopefully after a year the won will be near 1100, so I can pick up that, and add 450,000 net yield on each 10mill TD. That's the last gasp for me though.

[sojusucks]

[michaelambling]

[Francis-Pax]