Kim Seung-yu, president of Hana Bank, said in an interview the IFC deal would help his bank's efforts to upgrade its credit rating by Moody's Investor Service.

The IFC on Monday signed a contract to provide a financing package of up to $152 million for Hana Bank, including a direct equity investment of up to $22 million and a quasi-equity investment of $30 million in convertible bonds and notes.

Other forms of investment include a $20-million loan for the IFC's own account and up to $80 million of a syndicated loan for the account of commercial banks.

The IFC is an arm of the World Bank.

"The contract with the IFC will improve our credit status greatly," Kim said after the signing ceremony. "The IFC deal can be leverage to attract foreign partners. In addition, that will help raise our credit rating." Hana's creditrating is now Ba2 from Moody's, a notch lower than South Korea's country rating of Ba1.

Neither rating is investment grade. "I think Hana deserves Ba1 in view of profitability, soundness and other areas of banking-sector appraisals," Kim said.

He said Hana's capital adequacy ratio as required by the Bank for International Settlements would increase to 12.49 per cent at the end of June from 11.83 per cent at end-May as a result of the IFC investment.

The bank's BIS ratio was 9.29 per cent at the end of 1997 and 10.48 per cent at the end of March. Hana earned 43.46 billion won ($31.22 million) in net profits in calendar 1997, compared with 44.57 billion won in 1996.

"We aim to see our profits rise to 70.6 billion won this year," Kim said. The IFC investment project was the first direct foreign investment in a Korean bank since Korea accepted a record $58 billion bailout arranged by the International Monetary Fund last December. "Hana had gone through very tight and thorough assessments by the IFC.

Thefact that we satisfied them, I think, qualifies Hana as one of the country's best commercial banks," Kim said.