Standard & Poor's ruled out immediate rating downgrades for Korean lenders, but the credit-rating agency warned that the institutions are becoming more exposed to risks of capital erosion. "Korean banks are under pressure due to deteriorating asset quality, squeezing earnings, therefore potential risk of capital erosion," said Kwon Jae-min, S&P's director responsible for Korean banks' ratings. "As expected, we have seen increasing credit risk from small- and medium-sized enterprises and construction companies. The credit risk will continue in 2009."

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