BOK's loan extension on sharp rise

SEOUL, Sept. 2 (Yonhap) -- Loans extended by the Bank of Korea (BOK) to state-run firms reached the highest level this year in almost 16 years as the central bank has been involved in various state-led credit extension programs, data showed Tuesday.

The BOK's outstanding loans to such companies stood at 13.16 trillion won at the end of August, rising 64.7 percent from the 7.99 trillion won a year ago, according to the data compiled by the central bank.

The August figure also marks the highest since February 1999, when the comparable number was 15.08 trillion won, the data showed.

The sharp rise in loan extensions by the BOK came as the government has asked the central bank to lend money to state-run firms in a bid to resolve the credit crunch in the local corporate bond market.

Also, the central bank has set up a pool of money for loan extensions to smaller firms in line with the government's drive to expand support for them.

The increased loans can be absorbed through bond sales by the central bank, but a certain amount of interest should be paid to bondholders, which incurs an extra burden on the central bank.

The central bank's outstanding monetary stabilization bonds stood at 176.42 trillion won as of July, up 10.25 trillion won or 6.2 percent from a year ago.

BOK Gov. Lee Ju-yeol also said earlier that the central bank should be cautious in printing money as it is equivalent to the government's tax revenues to some degree.

sam@yna.co.kr
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