South Korea's top financial regulator said Wednesday local banks should speed up their corporate restructuring move and clear troubled assets to regain financial strength.
"Although corporate revamp drive may seem less imperative amid recent improvements in economic conditions, local assets should keep up with their efforts to make their assets sounder," Financial Supervisory Service Chairman Kim Jong-chang said in a meeting with local bank chiefs.
As of end-June, the ratio of 18 local banks' bad debts, referring to loans overdue more than three months, stood at 1.5 percent to their total lending, rising 0.03 percentage point from three months ago.
Local lenders, required to eliminate distressed assets from their balance sheets, promised the financial watchdog in early August to pull down their bad debt rate under 1 percent by end of this year.
Thus far, the South Korean government has been buying soured assets from banks and companies out of a 20-trillion-won, or 16.7 billion-U.S. dollar, corporate restructuring fund established in July.