The main goal of the revamping is to convert short-term loans that require immediate payment into long-term bonds that can be repaid more slowly and thus ease South Korea's shortage of money.

The option to convert existing loans into par bonds was chosen by 49 per cent of banks, and conversion to discount bonds was chosen by the remaining 41 per cent.

The options are automatic for students who get their loans directly from the Government - and that's a bigger chunk of borrowers, under the new law - and any student can convert private loans to these easier payment plans with a Government consolidation loan.

By converting loans into securities and selling them to investors, finance companies could generate a faster profit and have access to much more capital, and make many more loans.

The bank became Holzmann's biggest shareholder by converting bad loans into shares, and it installed one of its own top executives, Carl von Boehm-Bezing, as chairman of Holzmann's supervisory board.

We will reform the Social Fund, removing its cash limit and converting most loans into grants.

But in 1990, the Legislature enacted a law that greatly eased its cash flow problems by converting short-term loans into long-term debt, infusing $4.7 billion into the state's coffers.

Under the Brady plan, several countries have had their debt burden reduced and have converted old loans into new bonds that are more attractive to investors because they are backed by international guarantees.

The Federal Reserve said CitiFinancial engaged in "unsafe and unsound" practices by converting personal loans into home equity loans without adequately assessing borrowers' ability to repay.

The most likely buyers will be commercial banks, which will probably convert the savings and loans into bank branches, analysts say.