Deposit withdrawals at suspended savings banks decrease

The amount of deposits withdrawn from South Korean savings banks decreased on Friday from a day earlier, indicating a lull in investor panic following recent suspensions of seven ailing lenders, data showed. The Financial Services Commission, the country's financial watchdog, on Sunday temporarily halted the operations of seven savings banks for six months, citing their inadequate liquidity ratios. The move affected more than 640,000 customers whose deposits total 11.3 trillion won (US$9.7 billion) and raised concerns of a possible bank run at normally-operating savings banks, which may further hurt the troubled savings bank sector. Deposits retrieved from the normally-operating 91 savings banks reached 3 billion won as of noon, compared with 40.8 billion won on Thursday, according to data by the Financial Supervisory Service (FSS). The figure marks a sharp slowdown from 152 billion won logged as of Monday noon, the first working day following the suspensions. According to the FSS, the capital flows at 90 local savings banks, excluding Tomato 2 Savings Bank, shifted to positive territory. Withdrawals, however, continued at Tomato 2 Savings Bank, the sister company of suspended Tomato Savings Bank, but the retrieved amount came to 9.1 billion won as of noon, down from 23.2 billion won on Monday, according to the FSS data. Meanwhile, South Korea on Thursday started paying out provisional payments to depositors of the suspended savings banks. Customers can file to receive up to 20 million won of their suspended deposit accounts. The Korea Deposit Insurance Corp. said 86,579 customers applied to receive provisional payments totaling 1.1 trillion won on Thursday.