Moody's Investors Service said Thursday it may downgrade the ratings of some of South Korea's top banks over concerns they are too dependent on the government for foreign currency funding amid the global financial crisis.
Among the 10 banks put on review for possible downgrade were top lenders Kookmin Bank, Shinhan Bank, Woori Bank and Hana Bank as well as Citibank Korea, Moody's said in a statement.
South Korean banks have come under increased scrutiny as the worldwide credit crunch has made it harder for them to secure the dollars needed to roll over their foreign currency loans.
"The persistent global dollar shortage in the capital markets and increased investor wariness has been particularly challenging for the Korean and other banking systems that routinely fund a material portion of system loans with offshore foreign currency borrowings," Moody's said in a separate release.
Moody's said that South Korea's major banks rely on offshore capital markets for 10 percent to 12 percent of their total foreign currency funding, which it called a "material portion."
The South Korean government, which boasts the world's sixth-largest cache of foreign reserves, has taken aggressive steps to secure additional sources of foreign exchange liquidity through swap agreements with major central banks including the U.S. Federal Reserve and Bank of Japan.