Moody's Investors Service, global credit rating agency, said on Monday it lowered its credit ratings for eight South Korean banks due to their reliance on the government to secure funding.

Moody's said it downgraded the foreign currency long-term senior debt ratings of the eight South Korean banks, including Kookmin Bank, Shinhan Bank, Woori Bank, Hana Bank, Industrial Bank of Korea, National Agricultural Cooperative Federation, and state-run Korea Development Bank (KDB) and Export-Import Bank of Korea, to "A2," same as the South Korean government's credit rating.

The agency gave a stable outlook for seven financial firms, while rated KDB's outlook "negative."

"The above rating actions concluded the review initiated on January 15 to consider the appropriateness of the banks' foreign currency debt ratings vis-à-vis the South Korean government's given the banks' heavy dependence on government support to secure external funding," Moody's said in a statement.

In mid January, Moody's announced that it would take reviews on the South Korean lenders and would bring about possible degrades in their credit ratings.

The revision in credit ratings is attributed to South Korean banks' dependence on the government and the Bank of Korea, South Korea's central bank, for foreign currency liquidity, according to South Korea's Yonhap News Agency.

With their short-term overseas debt remaining at high level and the credit markets staying frozen, local banks, which suffer from a foreign currency shortage, have to turn to the government, Yonhap added.

On the other hand, Financial Services Commission (FSC) of South Korea reported on Monday that Moody's made the revision not because the banks' foreign currency liquidity conditions exacerbated, but rather because there have been changes in the Moody's appraisal methods.

According to FCC's report, Moody's, unlike Standard & Poor's and Fitch Ratings, took into consideration the government's funding abilities as well, when it evaluated the banks' foreign currency debt ratings.

The downgrade on banks' credit ratings is thus to be interpreted as a revision to adjust the discrepancy between the government's credit ratings and the banks', the report added.

(Xinhua News Agency February 9, 2009)