South Korea’s financial authorities will take disciplinary actions against banks for their negligence to be on the lookout for the default of conglomerates.
October 30, 2013 Leave a comment
Banks to face penalties over negligent lookout for default of conglomerates
2013.10.30 11:28:58
South Korea’s financial authorities will take disciplinary actions against banks for their negligence to be on the lookout for the default of conglomerates. The authorities will also increase the number of conglomerates who commit to improving financial structure to prevent another collapse of conglomerate as Tong Yang Group did. After Tong Yang Group’s subsidiaries filed for court receivership, the Financial Supervisory Service (FSS) decided to conduct a thorough evaluation of main creditor banks during its bank assessment to strengthen accountability of financial firms, said sources in the financial sector Wednesday. The FSS intends to enable creditor banks to request companies to hand over information on their expansion plans such as inter-subsidiary deals or merger and acquisitions (M&A) or changes in corporate governance and concentrate the information on main creditor banks.
The decision is part of an effort to check main creditor banks, as some banks were found to have evaded their duty to monitor corporations’ financial status and instead focused only on securing collaterals for lending.
The new evaluation targets main creditors of 30 major conglomerates, including Korea Development Bank (KDB), Woori Bank, Shinhan Bank and Hana Bank.
More companies will be required to make commitment to enhance their financial structures.
As of now, STX Group, Kumho Asiana Group, Hanjin Shipping Group, Dongbu Group, Taihan Electric Wire and Sungdong Shipbuilding & Marine Engineering signed agreements with their creditors to improve financial structures.
Meanwhile, the FSS examined the financial health of Hyundai Group, Doosan Group, Hanjin Shipping Group and Dongbu Group, who are suspected of being mired in cash crunch, and concluded they are in good shape.
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