© Reuters. FIE PHOTO-A South Korea wins notice in this illustration photo on May 31, 2017. REUTERS/Thomas White/Illustration
SEOUL (Reuters) – Customer withdrawals from MG Community Credit Cooperatives (MGCCC), a troubled South Korean credit union, have clearly stabilized amid government efforts to stave off a liquidity crisis, the Interior Ministry said on Wednesday.
South Korean state-run banks this week pledged total liquidity support of at least 2 trillion won ($1.55 billion) to MGCCC, after media reports about debt delinquency rates led to deposit withdrawals.
MGCCC said the debt default rate was manageable, while there were no signs of any spillover effect on South Korea’s large commercial banks so far.
However, sources told Reuters that the financial authorities have intensified their efforts to avoid the risk of a crisis in the financial market in the fourth largest economy in Asia, and also asked commercial banks to provide financing of about five trillion won to support the credit union.
More than 12,000 MGCCC customers had their accounts restored as of Wednesday afternoon, the Home Office said, after the credit union offered to keep interest and tax incentives on deposits if savings were withdrawn between July 1 and July 6 by Friday, without specifying the number of accounts. It has been closed.
($1 = 1,289.4100 won)
