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Creditor banks will assess the accounts of South Korea's top conglomerates in April and restructure their weakest units, the country's financial watchdog said on Thursday.
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CNBC.com |
The move indicates the government is taking a more aggressive role in spearheading corporate restructuring and expanding the scope into large business groups, as the global recession takes a heavy toll on Asia's fourth-largest economy.
"In the face of a global financial crisis, we need to launch prompt and effective restructuring to improve the health of our economy and prevent the spread of financial difficulty," the Financial Services Commission said in a statement.
If some of the conglomerates' units proved unhealthy, banks would sign agreements with them to enhance their financial status by selling assets or affiliate companies.
But the statement did not give the names of conglomerates to face review.
The government also will initiate funds led by state-run institutions such as Korea Development Bank to buy shares and assets of companies in the process of restructuring.
It said it was also ready to revise laws for private equity funds to attract investors into corporate restructuring funds.
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"The government will come up with legal and systemic tools to support restructuring. If needed, we will provide fiscal and tax support," the statement added.
Creditor banks will confirm by the end of March the rehabilitation plans of shipbuilders and construction firms picked last month for debt rescheduling programs.
Banks will also examine the accounts at other troubled companies in the two sectors by the end of March to wrap up their restructuring in a prompt manner.
The government will raise capital at the state debt clearer, Korea Asset Management Corp to increase its bad loan purchases.
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