Retail loans add $1 billion to first day retail offerings open for LGES
Lending by South Korean banks rose by nearly 1.4 trillion won ($1.1 billion) on Tuesday alone when two-day retail underwriting for initial shares of LG Energy Solution began.
According to Korea’s top five commercial lenders – KB Kookmin Bank, Shinhan, Hana, Woori and NH Nonghyup – on Wednesday, their loan balances reached 140.66 trillion won on Tuesday, adding 1.37 trillion won from the previous day. .
The explosive shift towards rapid individual borrowing was sparked by the astronomical institutional bids of $13 trillion for initial shares in the world’s second-largest electric vehicle battery maker.
Retail underwriting which closed on Wednesday also raised the bar for a Korean IPO, attracting deposits worth 114.1 trillion won.
Bank lending has been flat this year as the finance authority called on local lenders to keep annual household debt growth around 4%, tighter than last year’s 5%.
But the cap has swung due to a flood of requests, mostly through overdraft accounts that can be withdrawn immediately.
On Tuesday, the overdraft account balance reached 50.7 trillion won, adding 1.37 trillion won from the previous day. In addition, 1,557 overdrawn accounts were opened on Tuesday, up 52% from 1,026 a week ago.
A minimum of 1.5 million won is required to subscribe for 10 shares of LG Energy Solution and individuals have reportedly rushed to withdraw from overdrawn accounts to make the offers, an unnamed commercial lender official said.
Funds on demand from banks also went to the mega IPO.
A commercial bank’s demand deposit fell to 173.02 trillion won on Tuesday from 174.3 trillion won the day before.
By Moon Il-ho and Lee Eun-joo
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]