Two Korean savings banks debunk online rumors of liquidity crisis

Mobile messages that the two savings banks are on the verge of suspending deposit withdrawals because of alleged losses from project financing defaults worth 1 trillion won ($754.2 million) and urged investors to take out all of the deposits from their accounts. [Photo by MK DB]

South Korea’s OK Savings Bank and Welcome Savings Bank on Wednesday dispelled rumors of a liquidity crisis and launched legal actions against the individuals distributing false information.

Rumors spread on Wednesday via mobile messages that the two savings banks are on the verge of suspending deposit withdrawals because of alleged losses from project financing defaults worth 1 trillion won ($754.2 million) and urged investors to take out all of the deposits from their accounts.

OK Savings Bank and Welcome Savings Bank immediately launched legal actions against those behind the rumors, saying that the messages “were groundless.”

The Korea Federation of Savings Banks (KFSB) also said in a press statement that the rumors were false. The Financial Supervisory Service warned local investors of the risks of the disinformation and called for more caution.

“We identified the scaremonger who was incapable of checking the facts and even the personal details,” said an unnamed official from the KFSB. “The capital adequacy ratios of the two savings banks at the end of 2022 and liquidity ratios were all higher than the regular requirements.”

The average Bank for International Settlements (BIS) ratio of OK Savings Bank stood at 11.4 percent at the end of last year and Welcome Savings Bank 12.51 percent. The liquidity ratios for the both banks reached 250.54 percent and 159.68 percent, respectively.

Rumors of financial troubles have been on the rise in Korea amid the ongoing uncertainty around the failures of banks in the U.S. including the Silicon Valley Bank.

Korea‘s app-based lender Toss Bank, and the Korean Federation of Community Credit Cooperatives have also suffered from disinformation spread on social media.