[THE INVESTOR] Woori Bank needs to set aside loan-loss provisions of 700 billion won (US$ 594 million) to maintain its credit rating of AAA, credit rating agencies said on June 24.

Woori Bank’s BIS capital adequacy ratio declined to 13.5 percent as of the end of the first quarter, the lowest level among commercial banks.

Due to its exposure to debt-laden shipping and shipbuilding companies, the ratio has been plunged from 15.5 percent to 13.7 percent during two years between 2013 and 2015. 



According to ratings agencies, the lender’s Tier 1 capital ratio, which measures a bank’s financial health, stood at 10.4 percent and the common equity Tier 1 capital ratio was at 8.6 percent as of the end of March this year.

To retain the top ranking, banks must have BIS capital adequacy ratio of at least 12.5 percent, Tier 1 capital ratio of 10 percent and a common equity Tier 1 capital ratio of 9 percent.

“If the Tier 1 capital ratio goes under 10 percent it can face a rating cut,” said Lee Hyuk-joon, a researcher at NICE Investors service.

By Park Han-na (hnpark@heraldcorp.com)