Banks Banned From Choking Workout Firms
By Yoon Ja-young
Staff Reporter
A number of banks were found to have frozen deposits of construction companies that are to go through debt restructuring programs. The financial regulator urged the banks to stop choking the viable firms.
According to a number of the construction companies, some banks froze their deposits or refused to deliver bonds.
The Federation of Banks announced earlier this week that a total of 11 ailing construction and three shipbuilding companies will be put up for debt restructuring programs. The creditors determined to push C& Heavy Industries and Daeju Construction out of the market, leaving them to go bankrupt, while saving the 14 companies that were rated ``C.''
The creditors and the Financial Supervisory Service (FSS) had said that the firms subject to the restructuring programs are viable and that the plans will be implemented to help them survive and put management back on track.
However, some bank branches, including Shinhan and Hana, were found to have frozen deposits of these construction companies or refused to deliver bonds. Some of the firms failed to pay suppliers due to the freeze.
``We advised the banks to lift such restrictions on the firms to help restructure the firms and put their management quickly back on track,'' the regulator said.
It added that it would monitor difficulties facing the firms under restructuring programs and urge the creditor banks to actively engage in the workout and financial support programs for the construction and shipbuilding companies.
The regulator also requested the banks refrain from offsetting the companies' debt with deposits or asking for additional mortgage. ``The aim of the restructuring is to help the firms survive, not kill them,'' it said.