(Adds new details)
SEOUL, March 20 South Korea's inspection of
Barclays PLC's local unit was a routine, scheduled one
and had nothing to do with the units of the three Chinese banks
also under inspection, a central bank official said on Thursday.
South Korea is concerned about potential risks posed by the
rapid rise in exposure to China's markets and its currency.
Yuan holdings by South Korean residents soared to an
equivalent of $7.62 billion at the end of February, from $310
million six months earlier, as Chinese banks aggressively raise
funds overseas in response to tighter credit at home.
"The inspection of the Barclays unit is being made according
to a routine inspection schedule on foreign banks," said Cho
Jeong-hwan, director of the Bank of Korea's Office of Bank
Examination and Analysis.
Sources said on Wednesday the Barclays unit was being
inspected together with units of Bank of China Ltd.,
Industrial and Commercial Bank of China Ltd. and
China Construction Bank Corp over a spike in yuan
The sources had declined to say why Barclays was included in
the inspection while a media relations official at the bank
refused to comment at all.
Cho said the inspection of the Chinese banks' units was not
directly sparked by concerns about a spike in yuan-denominated
deposits received by the units in South Korea and then invested
mostly in China.
"It's true the yuan deposit issue is a big source of
interest these days but the inspection is not only focused on
the yuan deposits, but is also aimed at looking into their
overall fund-raising and operations," Cho said.
The Bank of Korea and the Financial Supervisory Service
(FSS) are jointly inspecting the units of the four foreign banks
and the inspection is due to last until March 28, Cho said.
Of the five Chinese banks operating in South Korea, Bank of
Communications Ltd. and Agricultural Bank of China
Ltd. were excluded from the inspection due to the
relatively small size of their operations, he said.
(Reporting by Choonsik Yoo; Editing by Clarence Fernandez)