South Korea will start its first injection of the bank reconstruction fund into five local banks in March, South Korea's Financial Services Commission (FSC) said on Friday.

The amount of capital injection for March will amount to 4.3 trillion won, or US$3.05 billion, according to the FSC.

"The first injection of the fund will take place late this month after reviewing applications submitted by local banks," the FSC said.

A preliminary survey showed that local banks want the fund to spend a total of 3.8 trillion won (US$2.7 billion) for purchasing hybrid bonds and 500 billion won (US$355.1 million) for clearing subordinate bonds.

The move came as local banks grow more hesitant and wearier over making loans to smaller, cash-strapped firms amid the deepening economic recession.

A total of 14 banks have showed interest in tapping into the fund, the FSC said, adding that the fund will be allocated according to banks' capital adequacy ratio and their track of loan records to smaller firms.

(Xinhua News Agency March 20, 2009)