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As Korean Bank Run Accelerates, Financial Services Chairman Deposits $17,864 To Demonstrate All Is Well

Tyler Durden's picture




 

Last Friday we reported that the soon to be quite pervasive spectacle of running to the bank only to find there is no money available, had spread to Korea. At that time only two banks were involved, although we speculated that "while the bank run at Busan was driven by capital inadequacy it may promptly spread to the entire banking system." Less than 3 days later, it has done just that. China Post reports that: "South Korea suspended operations at
four more savings banks on Saturday after runs developed as customers
rushed to get at their money despite official assurances the financial
sector was secure
." Gee whiz, looks like last week's promises that everything was contained were, gasp, lies? " The Financial Services Commission (FSC) said Saturday it was suspending three affiliates of Busan Savings Bank — Jungang Busan Savings Bank, Busan II Savings Bank and Jeonju Savings Bank — as well as Bohae Bank for six months each. “Considering recent waves of deposit withdrawals, available liquidity, remaining deposits and capacity to borrow, the FSC concluded that they might face a situation where they are unable to pay customers,” the FSC said."
And in an almost verbatim transposition of our own Telepromptermarionette-in-Chief's admonition in March 2009 that "profit and earnings" ratios were now cheap or some other such garbage, the head of the Financial Services Commission Kim Seok-dong (not related to Bang Dae-Ho) "vowed to make a personal deposit of 20 million won ($17,864) in Woolee
to convince depositors that the bank was financially sound.
" And if that doesn't work Korea can always rent Brian Sack out for a few days each week: truth be told, the US can easily cut down on the amount of weekly POMOs now that WTI is about to pass $100 (and Brent $110).

From China Post:

 The Financial Services Commission (FSC) said Saturday it was suspending three affiliates of Busan Savings Bank — Jungang Busan Savings Bank, Busan II Savings Bank and Jeonju Savings Bank — as well as Bohae Bank for six months each.

“Considering recent waves of deposit withdrawals, available liquidity, remaining deposits and capacity to borrow, the FSC concluded that they might face a situation where they are unable to pay customers,” the FSC said.

The freeze may be lifted if the banks recoup their liquidity, it said.

The FSC on Thursday put a six-month block on the operations of Busan Savings Bank and its affiliate, the Daejeon Mutual Savings Bank, and announced steps to support others that may be hit by increasingly precarious-looking property loans.

Busan is the country's biggest savings bank, with assets worth 3.74 trillion won (US$3.4 billion).

Last month, regulators shut down Samhwa Mutual Savings Bank which became insolvent because of soured property loans.

Also, it appears that Korea is the next country to conduct stress tests which confirm rather conclusively that the entire banking sector is insolvent:

The FSC said on Thursday that 94 of the country's 105 savings banks meet capital adequacy standards and it did not expect any more suspensions in the first half of the year.

It was not clear if the three institutions suspended Saturday were among the 11 the FSC deemed to have inadequate capital.

And the brilliant response by Korea's version of the FDIC:

Kim Seok-dong, the chairman of the Financial Services Commission, flew to Busan yesterday to stem massive withdrawals from savings banks after his agency suspended another four over the weekend.

The port city of Busan has emerged as the epicenter in the savings bank crisis after operations of the Busan Savings Bank group were suspended due to a capital shortage.

Kim repeated his vow yesterday that no more savings banks would be temporarily closed in the first half of the year “if there are no excessive deposit withdrawals.”

But this failed to halt deposit withdrawals in Busan. More than 500 customers waited in line from 3 a.m. in front of Woolee Savings Bank to take out their money and the numbers grew to 1,000 by 9 a.m.

Kim vowed to make a personal deposit of 20 million won ($17,864) in Woolee to convince depositors that the bank was financially sound.

To simply - this is equivalent to Sheila Bair depositing a couple hundred G's of hard earned taxpayer money in the jaw of death, better known as Bank of America.

Yet while BofA in the US is supposed to hit $30 according to John Paulson by the end of 2011, not even Korean are falling for such bullshit anymore:

Depositors seem to have lost faith in the financial regulator’s statements because the FSC suspended operations of the four savings banks only two days after it suspended operations of Busan Savings Bank and its affiliate Daejeon Mutual Savings Bank on Thursday, despite suggesting that no further suspensions were likely.

In total, seven of the country’s 105 savings banks have been suspended.

“How can we trust the financial regulator?” said Lee Hyung-sup, a taxi driver, when he heard the news about the suspension of more savings banks.

Perhaps there is hope for the US: once the financial system implodes for good, instead of Marsians, perhaps it is the Koreans, who actually learn from their (and our) mistakes, who can come over here and bail us out one more time, only to let Bernie Bernanke prove to everyone that third time really is the charm when reflating the mother of all ponzi bubbles.

 


 

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Mon, 02/21/2011 - 18:55 | 983148 Thorny Xi
Thorny Xi's picture

Who lost won?

Mon, 02/21/2011 - 19:12 | 983199 unwashedmass
unwashedmass's picture

 

yeah, i think Bennie Boy can ease off the gas pedal now......i mean with oil over $100, well, i think we'll see that "little inflation" he's been gunning for...

its all good....

its all good peasants....

Mon, 02/21/2011 - 20:24 | 983498 duo
duo's picture

I wanna know if the ATMs will be working at the airport when I get there next Wednesday.

Bringing a couple of Krugs just in case.

Mon, 02/21/2011 - 18:57 | 983154 cossack55
cossack55's picture

Which, of course, begs the question: Who is related to Bang Dea-ho?

Mon, 02/21/2011 - 19:17 | 983218 Caviar Emptor
Caviar Emptor's picture

Sooky Dong Kwack

Mon, 02/21/2011 - 18:59 | 983156 Bastiat
Bastiat's picture

Kim Seok-dong (not related to Bang Dae-Ho)

LOL!


Mon, 02/21/2011 - 18:58 | 983157 Ragnarok
Ragnarok's picture

Kim Seok-dong? Seriously, I think the elites are messing with us.

Mon, 02/21/2011 - 21:10 | 983654 dark pools of soros
dark pools of soros's picture

long time? or is she short?

Mon, 02/21/2011 - 21:26 | 983698 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

For 5 dollar.

Mon, 02/21/2011 - 19:00 | 983165 RobotTrader
RobotTrader's picture

Might as well start printing won hand over fist.

Everyone is going to start looking at The Ben Bernank as the example of how to bail out a financial system and immediately launch a 100% increase in stock indexes.

Mon, 02/21/2011 - 19:08 | 983186 lieutenantjohnchard
lieutenantjohnchard's picture

which is why your market wisdom told you to short oil, gold and silver. and yet we are to believe using your wisdom you were able to make enough money in the market to "retire."

btw: the old scroomer as you call him - gentleman jim sinclair - sends his regards. i think he said he might send you a 1 oz gold eagle for the spanking you gave him for being a gold bull during a money printing regime. said he learned a lot from the old catfish mouth.

 

Mon, 02/21/2011 - 19:11 | 983196 lieutenantjohnchard
lieutenantjohnchard's picture

silver $34.12. scroomers of the world: unite!

Mon, 02/21/2011 - 19:23 | 983263 RobotTrader
RobotTrader's picture

Heh, I was never short anything. Like I said, I don't short until the Summation rolls over.

And I got plenty of gold and silver, the most recent stash bought from YOU when you threw in the towel last month along with the other CIGA's who got rolled by the PigMen.

Sorry....

Mon, 02/21/2011 - 19:46 | 983358 lieutenantjohnchard
lieutenantjohnchard's picture

hey catfish mouth, speaking only for myself i can assure you that i still have all my silver and gold, which is my only investment. i have a thesis by which i invest. i don't change with the wind.

btw: brief question while i have you on the line:

which infamous zh'er said the following?

1) "No doubt, JPM pocketed billions on its silver shorts, as it always does."

2) jpm doesn't have a short position in silver. it's a myth.

if you said yourself then you are correct. go buy yourself a wind dial so you'll know which way the wind is blowing for your investing thesis of the day.

:

 

Mon, 02/21/2011 - 21:50 | 983776 dark pools of soros
dark pools of soros's picture

he sleeps downwind of the bernaks farts

Mon, 02/21/2011 - 22:01 | 983819 topcallingtroll
topcallingtroll's picture

so why do you call him catfish mouth?

Mon, 02/21/2011 - 20:48 | 983587 Fearless Rick
Fearless Rick's picture

Hey, RT, I'm thinking of going long butt plugs and heard you're an expert. Any ideas? Enemas?

Mon, 02/21/2011 - 21:59 | 983814 topcallingtroll
topcallingtroll's picture

rude boy prostate massagers are prefered by 9 out of 10 guys with prostate "problems" who try "internal massage."

Sold at your local sex shop and amazon.com near you!

Butt plugs are so ancient!  Pretty soon they will have robot massagers that will crawl up your ass.

Mon, 02/21/2011 - 22:30 | 983935 Iam_Silverman
Iam_Silverman's picture

"Pretty soon they will have robot massagers that will crawl up your ass."

Ewwwww, mechanized gerbils.  Yuck.  What would you wash them with?

Mon, 02/21/2011 - 23:41 | 984158 StychoKiller
StychoKiller's picture

Um, WTI?

Mon, 02/21/2011 - 21:57 | 983802 taraxias
taraxias's picture

@ RoboTroll

 

I call bullshit.

Whatever credibility you thought you may have had on here just went out the window with your last post.

 

I almost forgot, Alf sends his regards.

 

 

Tue, 02/22/2011 - 00:23 | 984269 mogul rider
mogul rider's picture

Ok that's not nice

 

say you're sorry

c'mon we are all fuckheads around here and if you can't back a fuckhead bro

well....

 

then we have a problem

 

just saying

Tue, 02/22/2011 - 01:07 | 984363 disabledvet
disabledvet's picture

perhaps a currency backed by Kia?  i sense "zero percent financing" washing ashore.  Can a "take out" by GM be far behind?

Mon, 02/21/2011 - 19:02 | 983167 DonutBoy
DonutBoy's picture

Well now,  Tuesday should be an interesting day for our central price bureau. Let's see, on the To-Do list we  have:

1) Close Green with oil over $100

2) Mouse-click some money to selected friends to keep XAU under 1400 and XAG under 35

3) Announce new international commitment to Korean banks, because no one defaults ever

I'll bet they're already at work those busy beavers!

Mon, 02/21/2011 - 19:03 | 983170 Mae Kadoodie
Mae Kadoodie's picture

One korean was just quoted as saying, "  I deposit $30 million won and the bank gave me this toaster.  But I cannot afford to buy the bread."

Tue, 02/22/2011 - 00:24 | 984272 mogul rider
mogul rider's picture

Now that my friend is 'flation'

 

not sure exactly what kind but definitely flation

Mon, 02/21/2011 - 19:03 | 983173 Yen Cross
Yen Cross's picture

 Hey did any one catch that 40 pip spike in usd/jpy just before swaps? Short covering? DXY is holding those high 77's pretty well. DOW cfd's are off 73.45 and SPX CFD's are off 11.36.

Mon, 02/21/2011 - 21:55 | 983795 topcallingtroll
topcallingtroll's picture

I think we have seen the low in the dollar for a while.

Mon, 02/21/2011 - 19:06 | 983182 Cognitive Dissonance
Cognitive Dissonance's picture

And Gold is off and running in the overnight session. Now at $1,408.80 and counting.

Mon, 02/21/2011 - 19:19 | 983231 seek
seek's picture

Silver too, both went vertical right at 1800, someone must have been waiting to buy.

Mon, 02/21/2011 - 19:19 | 983241 Caviar Emptor
Caviar Emptor's picture

The Herbert Hoover moment: classic too little, too late

Mon, 02/21/2011 - 19:27 | 983284 umop episdn
umop episdn's picture

'Zactly. Didn't some rich dude buy 10,000 shares of US steel during the Crash of '29, which had no discernable effect back then? Won't work this time, either.

Mon, 02/21/2011 - 19:25 | 983267 YHC-FTSE
YHC-FTSE's picture

If this shows anything, it proves the old adage that the savings bank business model is piss poor (If run honestly). It's a low margin business and like the rest of them can take a cashflow dent in bad times.

I noticed that the S.Koreans like to keep cashier's cheques issued by various banks for rainy days instead of depositing them - they can literally be used anywhere in the country like large denomination cash notes, so a bank run seems a bit odd. 

Mon, 02/21/2011 - 19:59 | 983402 chump666
chump666's picture

There is an analyst from Korea, she predicted this a while back.  Sth Korean banks are underfunded risk engines.

Can't wait for China to go next...there only thing keeping Portugal alive and Spain.

Asia's liquidity crisis is upon us.

Mon, 02/21/2011 - 20:16 | 983460 laughing_swordfish
laughing_swordfish's picture

+ 100

Mon, 02/21/2011 - 20:23 | 983491 chump666
chump666's picture

yep watch China suck liquidity out of their system...

Tue, 02/22/2011 - 04:12 | 984504 Non Passaran
Non Passaran's picture

How can there be one when they print all they want? U.S.-style stagflation is much more likely in bubblicious Asian economies.

Mon, 02/21/2011 - 20:14 | 983454 penisouraus erecti
penisouraus erecti's picture

Apparently they don't sell enough latte over there

http://finance.yahoo.com/banking-budgeting/article/112150/signs-economy-...

Mon, 02/21/2011 - 20:17 | 983465 Poofter Priest
Poofter Priest's picture

Wow was this guy BOLD or what?

It probably should be noted that the banks there insure deposits up to 50 million won.

So...like...the dude is covered.

Mon, 02/21/2011 - 20:19 | 983471 dick cheneys ghost
dick cheneys ghost's picture

bank of america nighmare mortgage story. i dont know have these crooks get away with this shit.

 

http://nakedempire.wordpress.com/

 

 

Mon, 02/21/2011 - 20:31 | 983522 bankruptcylawyer
bankruptcylawyer's picture

kim suck dong? really?

Mon, 02/21/2011 - 20:44 | 983573 mcguire
mcguire's picture

tyler et al, i am very proud of you for acknowledging, with the hat-tip to the Marsians, the very real fake-UFO ploy that is about to unfold as TSHTF..  disclosure: long popcorn..

Mon, 02/21/2011 - 21:32 | 983719 mcguire
Mon, 02/21/2011 - 20:47 | 983581 MacHoolahan
MacHoolahan's picture

Excellent! having patiently held off the deck-chair and fridge of beers for about 26 months I can finally sense panic in the the ranks of the Ponzi inflaters.

 

Got the food, got the fuel, got the gun.

Mon, 02/21/2011 - 21:54 | 983788 topcallingtroll
topcallingtroll's picture

If the rest of the world stays scared and jittery it won't hurt the dollar.  Bennie can qe a lot longer  because liquidity preferences will change.

sure gold and silver may benefit more.

Mon, 02/21/2011 - 22:53 | 984020 chump666
chump666's picture

yeah probaly 2-3 mths of bubble s&p and dow...then they sink with the rest

Mon, 02/21/2011 - 22:57 | 984009 mynhair
mynhair's picture

WTF are the Marsians?

Is that like klowns from Canadia?

Mon, 02/21/2011 - 23:45 | 984171 StychoKiller
StychoKiller's picture

Marsian is what Martians call themselves, feel more enlightened now? :>D

Tue, 02/22/2011 - 00:19 | 984260 mogul rider
mogul rider's picture

yo who you calling Klowns

 

Be careful

we own you

Mon, 02/21/2011 - 22:53 | 984012 mynhair
mynhair's picture

Dupe me, baby!

Tue, 02/22/2011 - 00:17 | 984254 natty light
natty light's picture

Remain calm; all is well.

http://www.youtube.com/watch?v=zDAmPIq29ro

Tue, 02/22/2011 - 00:17 | 984257 mogul rider
mogul rider's picture

sell your hyundais and kias bitchez

Tue, 02/22/2011 - 00:26 | 984283 mogul rider
mogul rider's picture

So I have a question

 

if the China government gets fucked over by the stupids

what happens then?

Man i'm not liking my thinkin

 

just saying

Tue, 02/22/2011 - 00:32 | 984292 squexx
squexx's picture

Bring a Cirrus bank card if you want to use your account back home. You can sell Krug's or any other kind of gold coins in Jongno-3 Ga. It's near the center of town and is the gold center of Seoul. There are many gold and silver shops there.

 

I wonder if there will be a run on the money? I'm expecting a crash to come out of Asia and spread worldwide. I don't think it'll come out of Korea, but who knows? Like I said before, I have about  1000 oz of Korean silver Olympic (et al) coins waiting to go up in value.

Tue, 02/22/2011 - 01:10 | 984370 disabledvet
disabledvet's picture

OIL, OIL, OIL.  Supply lines gettin' cut...just like i said "smoke 'em if you got 'em." 

Tue, 02/22/2011 - 01:57 | 984428 robertocarlos
robertocarlos's picture

Damn , I'm all out of frozen pizzas.

Tue, 02/22/2011 - 04:54 | 984518 savagegoose
savagegoose's picture

yeah and that dick is prob going to be guaranteed of getting every cent he owns out when TSHTF no wonder he can deposit his cash happily.
run peasants run, run like your army was about to blow up the bridge you are on as the nth are coming, RUN

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