44 Chaebol Face Financial Status Check
By Yoon Ja-young
Staff Reporter
The Financial Supervisory Service (FSS) has started monitoring the financial stability of conglomerates amid the worsening economy.
Though the regulator stressed otherwise, the market is keen that it could lead to the restructuring of conglomerates.
The financial regulator said it required major creditor banks to hand in evaluations of the financial status of 44 conglomerates as of the end of September 2008 by Feb. 10. The major creditor banks are to evaluate the financial status of the top 43 conglomerates in terms of financial obligation, including Samsung, Hyundai Motor, SK and Eugene Group, the debt of which increased following the acquisition of Hi Mart.
``It's part of the regular monitoring of conglomerates,'' the FSS said, adding that it would continue the monitoring activities each quarter for the time being, as the economy is turning from bad to worse. The economy contracted by 5.6 percent in the fourth quarter last year, the sharpest fall since the Asian financial crisis a decade ago.
Banks typically used to submit reports on the financial status of major debtor businesses in April based on the financial reporting of firms that closed their accounts in December. Hence, the market is wondering why the regulator required the evaluation two months earlier than usual.
FSS Governor Kim Jong-chang said earlier this week that the regulator would strengthen liquidity monitoring on industries other than construction, shipbuilding and conglomerates to cope with signs of insolvency in advance.
The Korea Federation of Banks announced the restructuring program Tuesday, driving Daeju Construction and C& Heavy Industries out of the market and putting 14 construction and shipbuilding companies under debt rescheduling plans.