Fitch: South Korea's Key Policy Banks...>

SOUTH KOREA: Fitch: South Korea's Key Policy Banks - Countercyclical Policy Role

Stands Out Amid the Coronavirus-Triggered Downturn

- South Korea's three policy banks are the key institutions to implement the

KRW175 trillion support package that the Korean authorities have announced to

restore the stability of financial markets amid the coronavirus pandemic. The

key policy banks' extensive credit supply in times of significant disruptions in

the economy and financial markets should ease the risk of a sharp deterioration

in the financial profiles of commercial banks. The countercyclical role of these

three policy banks is being called upon again during this coronavirus-induced

economic recession, similar to the previous economic woes such as the 2008

global financial crisis. Another major avenue through which their policy role is

executed is their participation in stabilisation funds (eg the Bond Market

Stabilisation Fund) set up by the government. We expect the government to boost

the support measures further via the key policy banks if disruption deepens in

the economy and financial markets.

- Link: https://tinyurl.com/ybx99hhy