South Korean banks' exposure to cash-strapped Greece is not so large, the financial watchdog said Tuesday, raising expectations that a default by the struggling European country would have a limited impact on them.
  

Local banks and non-bank institutions' exposure to Greece stood at $1.18 billion as of end-March, accounting for 1.3 percent of the country's total overseas lending, according to the Financial Supervisory Service.
  

The watchdog said the exposure is loans to Greek shipping firms through the state-run policy lender Korea Exim Bank.
  

"Even if Greece falls into default, South Korean financial firms are expected to face a limited impact or damage from it," said an official from the FSS.
  

However, the FSS said it is following the situation closely as recent international equity markets have been swayed largely by the Greek turmoil.
  

The FSS will heighten monitoring on the local financial market, especially the foreign exchange market, to prevent potential volatility. (Yonhap)