ID :
46415
Thu, 02/19/2009 - 17:42
Auther :
Shortlink :
https://www.oananews.org//node/46415
The shortlink copeid
Korea to set up corporate restructuring fund
SEOUL, Feb. 19 (Yonhap) -- South Korea's financial watchdog said Thursday it plans to set up a corporate restructuring fund under the state-run debt clearer to buy bad debt from local financial firms.
A growing number of local companies are facing a liquidity squeeze amid the
global economic slump that has dealt a harsh blow to the export-driven South
Korean economy.
"Swift and effective corporate restructuring is necessary to prevent financial
jitters from weighing on the real economy," Chin Dong-soo, chairman of the
Financial Services Commission (FSC), told a press conference.
The watchdog said to preemptively tackle the deteriorating economic conditions,
it plans to launch a fund under the Korea Asset Management Corp. (KAMCO) to
purchase distressed loans and support the corporate revamp efforts.
The fund will be financed by the sale of government-guaranteed bonds, it added.
Chin said the watchdog may unveil the size and details about the fund in March.
Experts say the launch of the fund will revive the injection of public funds. The
government poured massive amounts of public funds into financial companies to
rescue them from bankruptcy in the wake of the 1997-98 Asian financial crisis.
KAMCO, established in late 1997, is in the process of buying bad debt worth 1.3
trillion won (US$881.6 million) related to property loans extended by local
savings banks. The state-run agency will also clear distressed property loans by
domestic banks in April and May.
His remarks come as a raft of economic data are reinforcing the view that the
South Korean economy is rapidly heading into a recession this year.
Amid the slowing economy and the credit crunch, local banks, wary of rising bad
loans, have been reluctant to weed out their ailing corporate clients and extend
loans to smaller firms.
In mid-January, local banks decided to end support to two ailing companies and
reschedule debts at 11 builders and three shipbuilders to keep potential defaults
from rattling the slumping economy. They are in the process of singling out more
troubled construction firms and shipbuilders.
"The corporate restructuring drive will be led by creditor financial firms. The
government will support their efforts," Chin added.
The country will also seek to launch a special fund to buy stakes in ailing local
companies and to accelerate sales of assets in such companies.
The FSC also said credit banks will review the financial health of 44
conglomerates starting in April and the watchdog said it is holding consultations
over how to revamp ailing local shippers with related agencies.
A growing number of local companies are facing a liquidity squeeze amid the
global economic slump that has dealt a harsh blow to the export-driven South
Korean economy.
"Swift and effective corporate restructuring is necessary to prevent financial
jitters from weighing on the real economy," Chin Dong-soo, chairman of the
Financial Services Commission (FSC), told a press conference.
The watchdog said to preemptively tackle the deteriorating economic conditions,
it plans to launch a fund under the Korea Asset Management Corp. (KAMCO) to
purchase distressed loans and support the corporate revamp efforts.
The fund will be financed by the sale of government-guaranteed bonds, it added.
Chin said the watchdog may unveil the size and details about the fund in March.
Experts say the launch of the fund will revive the injection of public funds. The
government poured massive amounts of public funds into financial companies to
rescue them from bankruptcy in the wake of the 1997-98 Asian financial crisis.
KAMCO, established in late 1997, is in the process of buying bad debt worth 1.3
trillion won (US$881.6 million) related to property loans extended by local
savings banks. The state-run agency will also clear distressed property loans by
domestic banks in April and May.
His remarks come as a raft of economic data are reinforcing the view that the
South Korean economy is rapidly heading into a recession this year.
Amid the slowing economy and the credit crunch, local banks, wary of rising bad
loans, have been reluctant to weed out their ailing corporate clients and extend
loans to smaller firms.
In mid-January, local banks decided to end support to two ailing companies and
reschedule debts at 11 builders and three shipbuilders to keep potential defaults
from rattling the slumping economy. They are in the process of singling out more
troubled construction firms and shipbuilders.
"The corporate restructuring drive will be led by creditor financial firms. The
government will support their efforts," Chin added.
The country will also seek to launch a special fund to buy stakes in ailing local
companies and to accelerate sales of assets in such companies.
The FSC also said credit banks will review the financial health of 44
conglomerates starting in April and the watchdog said it is holding consultations
over how to revamp ailing local shippers with related agencies.
