S. Korea to accelerate restructuring of shippers

SEOUL, March 5 (Yonhap) -- South Korea's financial watchdog said Thursday the
country plans to step up its drive to revamp ailing shippers in a bid to keep
potential defaults from rattling the slumping economy.
Smaller local shipping lines have been feeling the pinch of the global financial
crisis and the slumping economy, with some facing a severe liquidity squeeze.
Experts have warned that a possible bankruptcy chain reaction will undermine the
soundness of the shipbuilding and banking sectors, dealing a harsh blow to the
whole economy.
"The watchdog plans to advise creditor banks to complete their reviews of the
credit risks of ailing shippers by early May to accelerate the restructuring
drive," said the Financial Services Commission (FSC) said in a statement.
The government also plans to craft policy measures to give support to the
shipping industry such as tax benefits, it added.
The move comes as local banks have become increasingly reluctant to lend,
especially to smaller, cash-strapped firms, due to fears that a deepening
economic slump may result in more bad loans, compromising their financial
soundness.
South Korea has stepped up its process of weeding out troubled companies. In
mid-January, local banks decided to end support to two ailing companies and
reschedule debts at 11 builders and three shipbuilders. They are in the process
of singling out more troubled construction firms and shipbuilders.
sooyeon@yna.co.kr
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