Korean Bank Run Spreading: Eighth Bank Closes Following "Massive Withdrawals"

Tyler Durden's picture

The quietest bank run that has so far completely evaded mainstream attention, that of Korea, is spreading, and an eighth bank has now shuttered after "Domin Bank, a savings bank with a capital adequacy ratio below 5
percent, voluntarily decided yesterday to suspend its operations
temporarily because of massive withdrawals." As JoongAng reports: "The decision took both depositors and financial regulators by surprise
since it was the first time that a local bank shut its doors on its own." Apparently the courageous decision by the Financial Services Chairman Kim Seok-dong to deposit $17,864 in a troubled bank has not done much if anything to prevent the locals from realizing that their banking system is built on a house of cards.

From JoongAng Daily:

Domin Bank, which has six branches in Gangwon, was placed on a watch list last week by the Financial Services Commission. The move triggered a bank run on Domin Bank.

According to Domin Bank, deposits amounting 31.8 billion won ($28.2 million) were withdrawn since last Thursday, including 18.8 billion won on Monday.

The news of Domin Bank’s temporary closure came as FSC Chairman Kim Seok-dong was visiting Mokpo, South Jeolla, where recently suspended Bohae Savings Bank is located.

Seok-dong unhappy:

“This savings bank was supposed to submit a management improvement plan
to the FSC by Feb. 24,” said Kim. “We will now have to review whether
[the closure] is even legally O.K.”

More classic quotes follow:

Bae Joon-soo, senior FSC deputy director, said, “I think it is legally and morally wrong for a financial firm to do such a thing.”

Now we get it: according to the banking cartel's ethical standard it is "legally and morally wrong" for a bank to admit it is insolvent. Perhaps if America had made this clear 2 years ago, we could have spared ourselves two years of fingerpointing and fictitious lawsuits. After all, say what you will about the tenets of banker national socialism, at least it's an ethos.

The financial regulator and the Federation of Savings Banks failed to persuade Domin Bank to resume its operation yesterday.

The bank in notices posted on the doors of every branch said that it had taken the move “as a means to soothe the crisis involving massive withdrawals.”

The notice continued, “We will resume operation after we are reborn as a sound savings bank by increasing our paid-in capital to achieve a capital adequacy ratio of 8 percent.”

We repeat our appeal for the FDIC and Treasury to send our crack fraud and book cooking team to guarantee to the Koreans that their bankrupt banks are perfectly ok before this thing gets really out of control, and migrates to China, where a billion man bank run will be a little harder to keep under wraps.

h/t Paulo

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FOC 1183's picture

"Domin", not to be confused with "Domino"

bonddude's picture

The IndyMac/Sonoma Valley Bank and

$400 + Million fraud continues waiting for

enforcement actions. You'll love the way you're

not to big or small to fleece.


DoChenRollingBearing's picture

Oh noooooooooo, not the KOREAN banks, our company in Peru gets 60% of our bearings from there...

Ai yai yai!

Sudden Debt's picture

Ours all come from Germany.

Korean bearings suck because the hardness of the metal isn't consistent overall. You should do some quality checks on them.


Michael's picture

The Bank-Run Blogs, like the Housing Bubble Blogs, are starting up.

Let the World Wide Bank Runs Begin: First up, South Korea


By John Galt
February 20, 2011

"While the mainstream media and Bubblevisions have been ignoring the capital flight and bank runs in Greece and Ireland, it is going to be pretty hard to ignore this one:

S. Korea bank runs cause more suspensions

(China Post, Sunday February 20, 2011)

The largest South Korean savings bank in terms of assets, Busan Savings Bank, had their operations suspended Saturday due to an old fashioned bank run where panicked depositors stopped believing their government that there was no imminent financial crisis and the system was stable. While the government is adding liquidity to the system to stabilize the institutions, it does not take much imagination to see this phenomenon spreading like wildfire around the world. Thus get ready for March to come roaring in like a lion and a summer of high temperatures and instability unseen since the anti-colonial revolutions of the 1950′s and 1960′s in the Third World.

Thus it is time to  review the check list to insure that everything is in place to create panic, one nation, one financial system at a time so there is justification for imposition of a new globally designed geopolitical and financial structure:"

jus_lite_reading's picture

Whoops! If you think SK bank runs are lollipops, wait until the cat is out of the bag on German banks... don't forget, Germans think everything is great!

RafterManFMJ's picture

Fuckin' Banksters; nothin' changes.

FunkyMonkeyBoy's picture

What are they doing with the withdrawn cash? Any evidence of where these "massive withdrawals" are going?

max2205's picture

Koreans are a superstitious bunch. Or the price of dog meat is out of control

Gully Foyle's picture



Fan death

Fan death is an urban legend prevailing in South Korea in which an electric fan left running overnight in a closed room can cause the death of those inside. Fans sold in Korea are equipped with a timer switch that turns them off after a set number of minutes, which users are frequently urged to set when going to sleep with a fan on.[1]



The Korea Consumer Protection Board (KCPB), a South Korean government-funded public agency, issued a consumer safety alert in 2006 warning that "asphyxiation from electric fans and air conditioners" was among South Korea's five most common seasonal summer accidents or injuries, according to data they collected.[1] Also included among the five hazards were air conditioner explosions and sanitation issues, including food poisoning and opportunistic pathogens harbored in air conditioners. The KCPB published the following:

If bodies are exposed to electric fans or air conditioners for too long, it causes [the] bodies to lose water and [causes] hypothermia. If directly in contact with [air current from] a fan, this could lead to death from [an] increase of carbon dioxide saturation concentration [sic] and decrease of oxygen concentration. The risks are higher for the elderly and patients with respiratory problems. From 2003 [to] 2005, a total of 20 cases were reported through the CISS involving asphyxiations caused by leaving electric fans and air conditioners on while sleeping. To prevent asphyxiation, timers should be set, wind direction should be rotated and doors should be left open.




In summer, mainstream Korean news sources regularly report on cases of fan death. A typical example is this excerpt from the July 28, 1997, edition of The Korea Herald, an English-language newspaper:

The heat wave which has encompassed Korea for about a week, has generated various heat-related accidents and deaths. At least 10 people died from the effects of electric fans which can remove oxygen from the air and lower body temperatures...

On Friday in eastern Seoul, a 16-year-old girl died from suffocation after she fell asleep in her room with an electric fan in motion. The death toll from fan-related incidents reached 10 during the past week. Medical experts say that this type of death occurs when one is exposed to electric fan breezes for long hours in a sealed area. "Excessive exposure to such a condition lowers one's temperature and hampers blood circulation. And it eventually leads to the paralysis of heart and lungs," says a medical expert.

"To prevent such an accident, one should keep the windows open and not expose oneself directly to fan air," he advised.



4xaddict's picture

absolutely exquisite trivia roflmao

zaphod's picture

I have lived in Korea before and have to comment.


Fan Death is not considered an urban legend there. It is believed by most doctors and well educated (western educated too) people. Just about everyone I met believed in it.


For this bank run thing. These are small very local credit union type organizations going down. The Korean banking system is different from these saving banks and they are fine (at least for now)....

YHC-FTSE's picture


Thank you Mr.Beeblebrox. About the only guy who has posted actual knowledge based on personal experience.

Dr. Porkchop's picture


You know why Africa is such a wasteland? They have no fjords!

 - Slartibartfast

squexx's picture

Yes, a lot of Koreans believe the fan thing. But when I lived in Taiwan, many Taiwanese would drive with their lights off at night believing that having them on drained your battery. Strange beliefs are not limited to one country or region.

As for the bank runs, yes so far it is only the small ones in Pusan and now Daejun. But it's hard to say where it will end. Consider that land prices in Korea are out of sight, just like China, Korean's are generally over their heads in plastic debt, etc... Korea is even potentially more precarious than China, since they are dependant on the USA and China for most of their trade.

Sheepneck's picture


I am living in Seoul right now, and what zaphod says about both fan death and the banks is true.

DoChenRollingBearing's picture

That's very interesting stuff you posted Gully, thanks!  That sure is weird, the fan-running idea...

I am filled with gratitude, however, that the Koreans make good bearings, whatever urban legends they have.

Going Loco's picture

Confidence in electric fans can disappear overnight. The population of an entire country including educated persons like doctors can have a strong belief in electric fans but this is a fragile thing and can turn to mistrust and fear in a very short period of time - almost instantaneously. Electric fans can be a benefit to society one day and a lethal weapon of societal destruction the next. A bit like banks really.

Sathington Willougby's picture

I live very far away from Asia, I have real knowledge on the subject.  I hear the fans are creating air molecules devoid of oxygen to blow on people. Fans Implicated in Asphyxiation Taiwan.

reader2010's picture

Some of those Korean banks were heavily into the commerical RE projects here in the US at the height of the RE boom. Many of those projects ended up in tears. 

Troll Magnet's picture

not true.  south korean banks stayed away from the real estate boom in america and therefore escaped its collapse relatively unscathed.  but they are heavily invested in their own real estate bubbles which the government is propping up by any means necessary.

topcallingtroll's picture

I feel myself strangely attracted to you.

DoChenRollingBearing's picture

+ 2 to the trolls!

I needed the laugh after a rough day!

AbbeBrel's picture

Man what a magnetism / yin/yang / strange experience it must be to live in Seoul, around 60 km from the border with a Blank Space (on Google Maps) to the North.   I imagine a fuzzy bearded teenager could fly a Cessna (or Asian equivalent) and land on the capitol steps pretty easily, in either direction.

And then if you do a bit of historical overview of the chaebol, stir in some downturn and price drops on all panel flavor technology, and you wonder how long the supports for Korean industry can hold out with flattening demand and ASP (average selling price) plummetting...

Makes you wonder why the sheeple have waited this long to get just a bit nervous and start bleating about their money.  Especially if the elites have floated rumors about fans to hold down domestic demand for electricity!  Goodness sakes.   Let's see who gets nervous next!  - AB


Buck Johnson's picture

Why are the Koreans withdrawing their money out of the banking system? 

Jerry Maguire's picture

The usual.  They want to spend it.  They don't trust the bank.  Some combination of the two. 




Troll Magnet's picture

maybe they'll export their paper money to china.  i hear they can make rice out of paper.  magic time!

traderjoe's picture

If your bank was leveraged 20 to 1 - matching demand deposits (short tem liabilities) with long term assets, wouldn't you take your money out too?

Dr. Richard Head's picture

How many black swans are flying around these days anyway?  1@?  12?

max2205's picture

Have to laugh. The FDIC has like 800 banks on watch and no one here moves money to safer banks. In Korea you put a couple names on the list and bam they close the doors. I'd buy the FD in the US but there are about 350 million of them here

Convolved Man's picture

Time for Kim Jong-il to blitzkrieg the South Koreans with counterfeit $100 US FRNs, à la The Bernank.

Quinvarius's picture

I think Ben has them all booked up for a the next 6 months.

buzzsaw99's picture

...before this thing gets really out of control, and migrates to China, where a billion man bank run will be a little harder to keep under wraps.

Moist Chinese are too smart to trust a bank.

Mozzer's picture

I prefer my Chinese DRY, thank you ;)

GoinFawr's picture

Hehe, that was pretty opportunistic.

Troll Magnet's picture

most chinese are dirt poor and can't afford to bank.

camaro68ss's picture

thats why i only have the Bear minimum in my bank. Or maybe thats because im poor. eather way they cant hurt me. muhahahaha

topcallingtroll's picture

If you are unlucky enough to become wealthy you will realize you dont control wealth. It controls you.

The free and happy people seem to be the ones with few possessions to tie them down and consume their time. They really cant hurt you!

I've grown obama-rich at the expense of my health and free time. I might have chosen the middle way had I had the wisdom earlier.

Grab a back pack and rough it overseas while you are young. Get a job under the table teaching english. Be a ski bum, a beach bum.

Troll Magnet's picture

see, i'm the opposite.  i did all that when i was young.  drove around the country with my girlfriend for 3 months after college, packed some clothes and trekked around the globe, learned new (survival) languages, learned new cultures, boozed, partied, etc, etc.  then i got married, had kids and thought, "shit!  i should've been making money all along!"  the grass is always greener on the other side.

Dr. Richard Head's picture

However; young, dumb,and full of cum can take the best of opportunities and blow them.  Having become more worldy sure had afforded you a view how to make money.  Where as a drunk irish pussy hound like myself didn't find out how to make money until my debts claimed my soul.