Some Of Japan's biggest banks have vowed to quickly consider steps to help South Korea secure foreign credit, in the latest in a series of moves by international lenders to avert a possible national default.
"We will immediately and earnestly discuss market-oriented measures to assure the best solution, while keeping close contacts with major US and European institutions," a group of 10 major Japanese banks said in a joint statement.
Japanese banks hold a large portion of Seoul's $100 billion in short-term foreign debt, making their co-operation vital to attempts to restore South Korea's battered financial credibility.
The banks' announcement came after Japanese financial authorities repeatedly urged them to roll over loans to South Korea - despite their current efforts to cut lending in the light of worsening domestic economic conditions.
Mr Eisuke Sakakibara, Japan's Vice Finance Minister for International Affairs, said on Wednesday that a rolling over of existing loans by private Japanese banks to South Korea was a precondition for support for Seoul by the Group of Seven (G7) industrial nations.
Tokyo announced on Wednesday it would move forward the disbursement of $3.33 billion in loans to South Korea, equivalent to one-third of the up to $10 billion it has pledged to provide if needed.
Other leading nations and the International Monetary Fund (IMF) announced on the same day they would speed up the disbursement of $10 billion in a nearly $60 billion rescue package masterminded by the IMF.
Six top US banks said on Wednesday that they might supplement the $10 billion in accelerated disbursements and that they would start discussions with financial firms active in South Korea on how the private sector could best augment public funding.
Meanwhile, negotiations between the South Korean central bank and foreign banks in Paris on procedures for maintaining Korean banks' credit lines "are on track for a positive outcome", a French banking official said yesterday.
