Amount of assets, debt interlocked among financial firms tops 450 tln won: BOK

The amount of assets and debt interlocked among South Korean financial companies surpassed 450 trillion won (US$373.4 billion) this year, a growth that could increase the sector's vulnerability to a financial crisis, a central bank report showed Saturday.

The accumulated amount of money that financial companies raised from sales of market-traded financial instruments like bank debenture, repurchase agreement, certificate of deposit and commercial paper stood at 451 trillion won as of the end of September, according to the Bank of Korea's (BOK) report on financial stability.

The size accounts for 8 percent of total assets held by local financial companies. It also marks growth of 8.8 percent, or 36 trillion won, on-year as of the end of September, while total assets grew 6.8 percent on-year, according to the report.

A higher number means a loss at one financial company could carry higher risks to other financial companies.

The size of financial companies' interlocked assets and debts stood at 308 trillion won at the end of 2010, but steadily grew to 326 trillion won in 2011 before posting 404 trillion won at the end of 2014.

In 2015, the number further grew to 423 trillion won before adding 28 trillion won in the first nine months of this year alone, the report showed.

"As the credit risks of (general) companies rose this year, financial companies expanded their holding of bank bonds with relatively higher credit ratings instead of corporate bonds," the central bank said.

Source: Yonhap News Agency

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