Financial regulator calls for speedy corporate overhaul

SEOUL, May 6 (Yonhap) -- South Korea's top financial regulator called on the
nation's highly indebted conglomerates Wednesday to step up restructuring efforts
in order to keep their debts from weighing on the banking sector.
The remarks come as a number of debt-ridden business groups opt to wait out the
current economic downturn rather than restructure their operations.
"Highly leveraged conglomerates should increase efforts to overhaul their
businesses in order to win market confidence," Chin Dong-soo, chairman of the
Financial Services Commission, told reporters. "Reluctant companies will be
punished and held accountable."
Conglomerates that have become highly indebted due to their overexpansion should
even consider selling off affiliates to make their balance sheets cleaner, he
said.
As part of a bank-led corporate restructuring drive, debt-laden business groups
will be required to sign agreements with creditor banks to bolster their
financial profiles.
Chin also said the government will support the restructuring drive by tapping
money from a 40-trillion-won (US$31.4 billion) corporate restructuring fund.
The government is expected to set up the fund to purchase bad debts from local
financial firms and buy ailing firms' assets to cushion the impact of the
corporate restructuring drive on the financial industry.
The regulator further said the government will spend around one trillion won to
buy ships from shipping companies which have been hit hard by a plunge in
exports.
pbr@yna.co.kr
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