Fitch puts Korea policy banks on positive watch

Fitch Ratings said it placed Korea's three policy banks - Korea Development Bank (KDB), the Export-Import Bank of Korea (Kexim), Industrial Bank of Korea (IBK) and Small Business Corp. (SBC) - on Rating Watch positive.

This rating action is in line with the agency placing the Republic of Korea's long-term foreign currency A and local currency AA- ratings on Rating Watch positive on Sept. 19.

Fitch rates KDB, Kexim and IBK long-term A, short-term F1 and support 1. Meanwhile, SBC is rated long-term A, short-term F1 and long-term local currency AA-.

Fitch said its ratings on the three policy banks are not based on the banks' stand-alone financial strength but on their relationship with the Korean government. KDB, Kexim and IBK are implicitly guaranteed by the Korean government. Their borrowings are not explicitly guaranteed, but under their founding Act, the Korean government is obliged to maintain the banks' solvency.

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