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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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....

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.

cossack55's picture

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

Bastiat's picture

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

LOL!


Ragnarok's picture

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

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.

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.

 

lieutenantjohnchard's picture

silver $34.12. scroomers of the world: unite!

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....

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.

:

 

dark pools of soros's picture

he sleeps downwind of the bernaks farts

topcallingtroll's picture

so why do you call him catfish mouth?

Fearless Rick's picture

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

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.

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?

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.

 

 

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

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?

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!

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."

mogul rider's picture

Now that my friend is 'flation'

 

not sure exactly what kind but definitely flation

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.

topcallingtroll's picture

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

Cognitive Dissonance's picture

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

seek's picture

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

Caviar Emptor's picture

The Herbert Hoover moment: classic too little, too late

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.

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. 

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.

chump666's picture

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

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.

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/

 

 

bankruptcylawyer's picture

kim suck dong? really?

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..

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.

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.

chump666's picture

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

mynhair's picture

WTF are the Marsians?

Is that like klowns from Canadia?

StychoKiller's picture

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

mogul rider's picture

yo who you calling Klowns

 

Be careful

we own you