SEOUL - PRESIDENT Lee Myung Bak urged South Korean banks on Tuesday to share the pain and cut wages in return for foreign debt guarantees from the government of up to US$100 billion (S$147 billion).

'At a weekly cabinet meeting, President Lee stressed voluntary and pain-sharing self-rescue efforts by local banks, which have thus far provided their executives and employees with generous paychecks,' said presidential spokesman Lee Dong Kwan.

The cabinet approved a plan to offer the three-year guarantee on foreign-currency loans raised by domestic banks until June next year.

Under a financial stabilisation package unveiled Sunday, the central bank will also supply US$30 billion to banks and exporters in urgent need of the US currency.

The spokesman said the president also called for concerted efforts by the government and private sector to fill more jobs.

'Unemployment is particularly serious among young college graduates, while small and medium-sized manufacturing companies stricken by chronic manpower shortages are increasingly dependent on foreign migrant workers', he said.

'More society-wide efforts are needed to persuade young unemployed people to accept all jobs available at small and medium-sized business entities through short-term vocational training.'

The government insists that South Korea's real economy and financial sector are sound, despite the global turmoil.

But it says it followed other countries in guaranteeing interbank loans to avoid disadvantaging Korean banks when they borrow overseas, and to ease fears in the financial market.

Despite foreign reserves of almost US$240 billion, South Korea was seen as vulnerable to the world financial turmoil because of a surge in short-term foreign borrowing by its banks over the past year as US interest rates fell.

The global credit crunch was complicating efforts to roll over those loans, causing a scramble for dollars and a plunge in the won's value.

Some US$80 billion in foreign currency borrowing by Korean banks is due to mature by next June.

International agency Fitch said on Tuesday it has affirmed Korea's sovereign rating, describing Sunday's package as 'sufficiently focused and affordable.'

'The expected deterioration in Korea's external and fiscal balance sheet as the economy slows and as a result of measures to stabilise the financial sector is within the tolerances of Korea's (current) 'A+/AA' ratings,' it said in a statement. -- AFP