Naturally, the banks are none too pleased at being made to take the heat. After all, says Yoon Byung Chull, chairman of Hana Bank, past governments are mostly responsible for the sorry state of the banking industry. His bank is doing better than most because it steered clear of the policy loans the authorities used to funnel money to pet industries. Others were not so prudent and got caught in the collusion between the chaebol and the government. Korea First is a good example, although it cannot blame the authorities for all its woes.
Lousy management is another factor.
For example, Korean banks currently classify risky loans as ones on which no interest has been paid for six months or more. The IMF wants that period halved to bring them in line with international norms. Korean lenders are loath to do so, of course, because that would mean a quantum leap in the number of loans considered non-performing. There is no way out. The banks must reform.