Watchdog to beef up monitoring of large firms` financial health

SEOUL, Feb. 5 (Yonhap) -- South Korea's financial watchdog said Thursday it plans
to strengthen efforts to monitor the financial health of large companies as the
fast slowing economy corrodes their business conditions.
The global economic downturn and the credit crunch have left many local smaller
companies facing a severe liquidity shortage. Experts fear that large companies
may face a similar squeeze amid faltering exports and weak domestic demand.
The Financial Supervisory Service (FSS) said in a report to the ruling party that
the watchdog has notified local banks to evaluate the financial conditions of 44
conglomerates and to report the results to the FSS on a quarterly basis.
"If large companies' financial health deteriorates, the watchdog is considering
urging local banks to check their credit risks," said Kim Jong-chang, governor of
the FSS.
Meanwhile, the FSS said starting next month, creditor banks will begin reviewing
the credit risks of troubled shipbuilders and construction firms which were not
included as candidates for the corporate overhaul announced last month.
In mid-January, local banks decided to end support to two ailing companies and
reschedule debts at 11 builders and three shipbuilders in a move to keep
potential defaults from rattling the slumping economy.
They said two troubled firms will be urged to file for court protection or
survive on their own. Creditor financial firms will help 14 companies normalize
their business by rescheduling their debts.
sooyeon@yna.co.kr
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