SEOUL, Nov 11 (Reuters) - South Korea will boost banks' capital adequacy ratios by expanding its rescue package to possibly include the buying of banks' mortgage-backed securities, the Korea Economic Daily newspaper reported on Tuesday.
The report cited an unnamed official at financial authorities saying the government may ask the state-owned Korea Housing Finance Corp to purchase mortgage-backed securities from banks.
The nation's commercial banks saw their average capital adequacy ratio fall to 10.79 percent at the end of September from 11.36 percent at the end of June, the Financial Supervisory Service said early on Tuesday.
South Korean banks are usually expected to meet a 10 percent ratio to be considered healthy.
Banks' capital adequacy ratios have hit their lowest level in 7-½ years due to investment losses sparked by the global financial turmoil.
Those whose capital adequacy ratios fell below 8 percent during the 1997-98 Asian financial crisis received state funds.
(Reporting by Seo Eun-kyung; Editing by Jacqueline Wong)

((eunkyung.seo@thomsonreuters.com; +82 2 3704 5648; Reuters Messaging;eunkyung.seo.reuters.com@reuters.net) Keywords: KOREA ECONOMY/BANKS

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