1. Conditional approval of 5 banks’ revised self-rescue plan

After reviewing the revised self-rescue plan submitted by Hanvit, Peace, Kwangju, Cheju, and Kyongnam banks, the authorities approved their plan under the condition that they be included as subsidiaries of a government (KDIC) led financial holding company.

However, the authorities will also approve mergers with or integration to other sound banks for Peace, Kwangju, Cheju, and Kyongnam bank if they decide to do so. In order to be approved, both designated and partner banks must submit their specific merger/integration plan, which includes MOU, to the FSC before the KDIC starts capital injection. Meanwhile, partner banks are required to be a nation-wide bank with their BIS ratios of 8% or higher as of end-September, 2000.

2. The authorities requested KDIC to put capital injection to 6 banks

The recent due diligence conducted by the FSS on the six banks (above-mentioned banks and Seoul Bank) confirmed that each of the 6 banks’ liabilities exceeded their assets. Therefore, they are officially designated as ‘ailing financial institutions’ according the relevant financial restructuring laws, and subsequently, KDIC is requested of additional capital injection to the designated banks.

The total amount of capital to be injected will be estimated based on the actual and expected losses from selling-off bad loans (substandard and below) of the 6 banks. The main objective is to lower the ratio of substandard and below loans to their total loans to less than 6% and to raise their BIS ratios to more than 10%.

3. Complete capital reduction order

Complete capital reduction was ordered to the six banks prior to public fund injection. The shareholders will be granted of rights to demand the banks to purchase their shares at the price stipulated in the relevant laws.

* Please refer to the attached file for details.