South Korea closes seven savings banks

By Jiyeon Lee, CNN

STORY HIGHLIGHTS

Seven savings banks in South Korea were closed Sunday
Financial watchdogs closed the banks to boost the savings sector
Bank customers will be guaranteed $44,000 on their savings
Banks closed will have 45 days to normalize operations

Seoul (CNN) -- South Korea's financial watchdogs closed seven savings banks Sunday in a crackdown on unhealthy operators in the nation's savings sector.

The Financial Services Commission ordered them closed for six months. Nine banks were closed in the first half of the year. The commission reviewed 85 banks.

Customers will be guaranteed a maximum of 50 million won, or roughly $44,000, on their savings, according to depositor protection laws.

With the announcement, the financial watchdog said it has concluded the restructuring of South Korea's savings sector and assessment of management at each institution.

"Once the savings banks support system that we have been working on is institutionalized, I believe the uncertainty surrounding savings banks will be resolved and it will become a stabilizing factor for the uneasiness in the financial sector surrounding this industry," FSC Chairman Kim Seok-dong said at a press conference Sunday.

Kim said the seven banks in question will be given 45 days to their normalize operations. If they fail to meet the deadline, they will be sold to third parties or handed over to the Korea Deposit Insurance Corporation.