South Korea urges banks to support economic growth

SEOUL, July 13 (Reuters) - A top South Korean financial regulator on Monday called on banks to take an active role in supporting the economy and the government drive to find new growth engines such as green-themed businesses.

Chin Dong-soo, Financial Services Commission chairman, said in a meeting with heads of local banks that there was still a long way to go until a full-fledged economic recovery, although financial markets had recently stabilised.

"To make a recovery in the real economic sector, banks and other financial institutions need to continue to play big roles," Chin said.

"In particular, banks need to take a bigger role in supporting the government policy to nurture growth engines such as green growth."

Last week, the presidential office announced a plan to invest 107 trillion won ($83.7 billion), or 2 percent of annual GDP, in environment-related industries over the next five years. [ID:nSEO61955]

South Korea's economy grew at its fastest clip in 5-½ years in the second quarter but demand and investment are expected to remain weak for the rest of the year, data showed last week. [ID:nSEO216924]

The government had told banks to expand lending to smaller companies since late last year to cushion the fallout from the global credit crisis, while government officials repeated this month they would maintain expansionary policy for the time being.

($1=1277.7 Won)

(Reporting by Kim Yeon-hee; Editing by Jonathan Hopfner)