By Kim Tong-hyung

Korean banks are scrambling to reduce their exposure to Europe, which is struggling to cope with an increasingly toxic debt crisis.

The country’s biggest banks, which have in recent years leaned heavily on foreign currency borrowing, are moving fast to further diversify their funding sources, with leading Asian financial markets like Japan and Hong Kong emerging as the main attractions. The lenders are guarding against the possibility of troubled eurozone banks running for cover and calling in loans when push meets shove.

According to data from financial regulators, the Korean banking system’s loan exposure to European countries was measured at $54.9 billion as of April, accounting for 27 percent of the total borrowings at around $204.2 billion.

The proportion represented a 6 percentage point decline from 33 percent in June last year, indicating that financial authorities have been successfully pressing banks to lessen their dependence on European credit markets.

The country’s four major banking groups ― KB, Woori, Hana Financial and Shinhan ― confirmed that they have been tightly controlling their European debt. European funds accounted for around 30 percent of their foreign currency borrowing last year, the companies said, but they have now managed to suppress the level to the low 20s.

Woori Bank said that European funds currently account for around 20 percent of their foreign currency borrowing. Most of the company’s European loans are from Germany and Britain, while its exposure to funding markets of troubled nations like Greece, Spain, Italy, Portugal and Ireland are ``very low,’’ company officials said.

``We are preparing against the possibilities of European banks calling in loans en masse should the eurozone debt crisis takes the turn for the worse. Banks in Britain and Germany are comparatively safer, as they are capable of retaining their credit lines in times of trouble,’’ said an Woori Bank official.

European funds account for around 25 percent of Hana’s foreign currency borrowing, while its around 6 percent for KB Kookmin Bank. Shinhan, known to rely more on European funds than the rest of the big four, says it will be relying more on Asian funding markets.