Korean creditor banks put 36 large companies under debt scrutiny

2017.05.12 15:41:21 | 2017.05.12 15:42:20

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A total of 36 South Korean large companies will be put under a financial assessment by their respective creditor banks this year in a pre-emptive scrutiny on their balance sheet.

The number of the business groups subject to the debt assessment decreased from 39 a year ago with reduced borrowings from downsizing efforts amid an economic downturn, according to the Financial Supervisory Service (FSS) on Thursday.

Four business groups - STX Offshore & Shipbuilding, Hyundai Group, Hansol Group and Taeyoung Group -were excluded from the list this year, while Sungwoo Hightech Group that provides auto parts to Hyundai Motor Group was added.

STX Offshore & Shipbuilding was removed from the list after it was put under court receivership last year, while Hyundai Group was let off after Hyundai Merchant Marine was separated from the group.

The annual debt assessment program is a regulatory move on companies liabilities over 1.45 trillion won ($1.28 billion), which represent 0.075 percent of the entire credit line from lenders.

A conglomerate that fails to meet goals of desired debt conditions in the assessment is required to seal a contract with a creditor bank to provide stricter methods for improvement of capital structure or face disadvantages.

By Chung Seok-woo

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