South Korea injected on Tuesday a total of 3.96 trillion won (US$2.86 billion) into eightlocal banks, the nation's Financial Services Commission (FSC) said on Tuesday.

The capital injected to the local banks were tapped from the nation's 20 trillion-won (US$14.44 billion) bank recapitalization fund, originally launched to encourage local banks to expand loans, said the financial watchdog.

According to the FSC, the fund made a purchase of 3.45 trillion won, or US$2.5 billion, in hybrid bonds and 503 billion won, or US$363.3 million, in subordinated debts from eight financial firms, including top lender Kookmin Bank and leading financial services firm Woori Finance Holdings Co.

Currently, the South Korean government is allowed to inject the bank capitalization fund only into lenders whose capital adequacy ratio stands below 8 percent, a threshold to judge a bank's insolvency.

The average capital adequacy ratio of 18 commercial and state banks marks 12.19 percent as of end-December, up 1.33 percentage points from a quarter earlier.

(Xinhua News Agency March 31, 2009)