banks-FX liquidity

SEOUL, March 18 (Yonhap) -- South Korean banks' overseas borrowing conditions improved in January compared with about a year ago as the portion of short-term foreign borrowing declined sharply due to growing foreign-currency deposits, the financial regulator said Monday.

The outstanding amount of foreign-currency debts held by 12 local banks reached US$116.4 billion at the end of January, sharply down $9.9 billion from $126.3 billion at the end of 2011, according to the Financial Supervisory Service (FSS).

The sharp fall in banks' foreign-currency debts came as their short-term borrowing decreased on the back of a rise in foreign-currency deposits, with which banks were able to make a lot of short-term debt repayments, the FSS said.

The portion of their short-term foreign debts thus fell to the lowest level since 2008, coming in at 18.1 percent as of end-January, from 50.1 percent five years ago, it said.

Banks saw their foreign-currency deposits increase by $12.7 billion to $68.3 billion over the cited 13 months, as borrowing costs have dropped on the back of Korea's financial soundness.

The yield for banks' short-term borrowing in foreign-currencies dipped 33.6 basis points to 3.2 basis points in January from late 2011, with that of long-term borrowing falling 86 basis points to 88 basis points in the same period. A basis point is 0.01 percentage point.

The outstanding amount of short-term debts stood at $21.1 billion won in January, compared with $33.2 billion at the end of 2011. The corresponding figure for long-term debts, in contrast, grew 8.2 percent to $95.3 billion over the cited period, according to the regulator.

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