Business · Economy · 2 hrs ago
South Korean savings banks shift toward institutional deposits
South Korean savings banks had about 99.7 trillion won in deposits at the end of March, little changed from a year earlier.
But the mix of their deposits shifted: insured deposits fell by about 2.8 trillion won, while deposits not covered by deposit insurance rose by a similar amount.
Much of the increase came from specific money trusts and deposits linked to financial institutions and public bodies.
Banks are turning to these funds because they can sometimes borrow at lower interest rates than they pay on personal deposits, helping protect profits from lending.
But large institutional deposits can leave quickly if a major depositor changes its plans or a deposit reaches maturity.
Savings banks therefore need to balance lower funding costs with keeping enough cash available to meet withdrawals.
The figures cover the year to March, and the banks’ challenge now is to maintain a stable funding base while managing liquidity risks.
South Korean savings banks’ total deposits remained near 100 trillion won, while the mix of funds shifted toward institutional and trust-related deposits.
At the end of March, uninsured deposits were up 2.7404 trillion won from a year earlier, while insured deposits were down 2.7528 trillion won.
Uninsured deposits’ share of total deposits rose from 5.7% to 8.4%.
Savings banks may use institutional funds to reduce interest costs, but large withdrawals could add to liquidity pressures.
- Who
- South Korean savings banks.
- What
- Their deposit mix shifted toward institutional and trust-related funds, while total deposits stayed near 100 trillion won.
- When
- At the end of March, compared with the same period a year earlier.
- Where
- South Korea.
- Why
- Some savings banks are using institutional funds to lower funding costs and manage interest expenses.
This story does not have two clearly opposing sides.
Insured deposits were about 2.7528 trillion won higher and uninsured deposits were 2.7404 trillion won lower than at the end of March.
Uninsured deposits stood at 8.3785 trillion won and insured deposits at 91.3036 trillion won.
- Total deposits
- About 99.7 trillion won at the end of March
- Uninsured deposits
- 8.3785 trillion won, up 2.7404 trillion won year on year
- Insured deposits
- 91.3036 trillion won, down 2.7528 trillion won year on year
- Uninsured share
- 8.4% of total deposits, up from 5.7%
- Specific money trusts
- 1.5 trillion won at the end of March, up from about 600 billion won a year earlier
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What people are saying
Institutional funds can be raised at lower interest rates than ordinary personal deposits, which can help reduce savings banks’ interest costs, but liquidity management is important because large sums concentrated at particular institutions could be withdrawn in bulk when they mature.