South Korean banks’ credit loans grew by nearly 1.4 trillion won ($1.1 billion) on Tuesday alone when two-day retail subscription for initial shares in LG Energy Solution began.

According to Korea’s five major commercial lenders – KB Kookmin Bank, Shinhan, Hana, Woori, and NH Nonghyup – on Wednesday, their credit loan balance reached 140.66 trillion won as of Tuesday, adding 1.37 trillion won from the previous day.

The explosive turn to quick individual borrowings was triggered by the astronomical $13 trillion institutional bids for the initial shares in the world’s No. 2 EV battery maker.

Retail subscription that closed on Wednesday also raised the bar high for a Korean IPO, drawing deposits worth 114.1 trillion won.

Banks’ credit loans were stable this year as the financial authority called on local lenders to keep on-year growth of household debt in the 4 percent range, tighter than last year’s 5 percent.

But the cap tipped over from a flood of demand, mostly through overdraft accounts that could be pulled out immediately.

As of Tuesday, overdraft account balance reached 50.7 trillion won, adding 1.37 trillion won from the previous day. Also, 1,557 overdraft accounts newly opened on Tuesday, up 52 percent from 1,026 a week ago.

A minimum 1.5 million won is required to subscribe for 10 LG Energy Solution shares and individuals would have rushed to pull out from overdraft accounts to make the bids, said an unnamed official from a commercial lender.

Banks’ on-demand funds also went to the mega IPO.

Demand deposit of a commercial bank sank to 173.02 trillion won on Tuesday from 174.3 trillion won on the previous day.

By Moon Il-ho and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]