South Korea's financial services regulator has asked major commercial banks to prepare around $4 billion in financing to support a credit cooperative hit by customer withdrawals, two banking sources familiar with the matter said on Monday.
An official at the Financial Services Commission confirmed that banks had been asked to prepare liquidity through repurchase-agreement facilities to aid MG Community Credit Cooperatives, but did not comment on the amount. The official declined to be named due to the sensitivity of the matter and the commission had no further comment.
Sharply rising interest rates and a cooling property market have raised concerns about the potential impact on Asia's fourth-largest economy. The sources added that each of the banks was asked to prepare 1 trillion won of financing, or 5 trillion won in total , as potential support.MG Community said in a statement last week that its debt delinquency rate was manageable and it would work with the Interior Ministry to improve its financial soundness.
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