Hana Bank , South Korea's fourth-largest bank by assets, said it had pulled its 5-1/2 year dollar-based transaction to refinance $400 million subordinated bonds due in late September, noting that the returns demanded by investors had risen by more than 1 percentage point.

"Instead, we decided to issue the bonds in won," a Hana Bank spokesman said.

Shinhan Bank , the country's No.3 commercial lender by asset, said it had planned to sell up to $1 billion in dollar bonds but was now evaluating its options.

"There is no demand. The market is frozen," a Shinhan Bank official said.

However, both banks said that their foreign-currency funding remained sufficient to meet their requirements.

Markets have frozen up and risky assets have come under pressure due to concerns over financial contagion from a potential Greek debt default.