By Kim Yoo-chul
The head of the Export-Import Bank of Korea (Eximbank) said the export credit agency will continue pushing ahead with its plans to further restructure the ailing shipbuilding and shipping industries.
"We don't see any procedural issues; however, the top priority is the bank has to take steps to agree and then swiftly implement the plans while ensuring an adequate social safety net to back up workers affected by the restructuring," the bank's CEO Eun Sung-soo said in a news conference in downtown Seoul, Wednesday.
Eun said the bank is talking with the Korea Development Bank (KDB) about a possible merger between Sungdong Shipbuilding and Marine Engineering and STX Offshore and Shipbuilding, though the CEO said no concrete plans have been made about that so far.
"As a debt holder, the bank has to be very considerate in handling this issue," Eun told reporters. STX is managed by KDB, while Sungdong is controlled by Eximbank. STX went into receivership in 2016.
"When benefits and costs of debt restructuring are considered jointly, it becomes apparent that the economic costs of debt restructuring, both the cost to the creditors and the employment impact, are fully offset in the medium term by more rapid output growth and higher hiring," the bank CEO said, adding shipbuilders which have been controlled by creditors' banks won't be allowed to accept contracts below market price due to worries over profitability.
Shipbuilding downturn
Over the last few years, Korea's leading shipbuilders have been reeling from evaporating order books and excess capacity and are implementing capacity and job cuts, on top of asset sales, to survive. Smaller and mid-sized shipbuilders such as STX and Sungdong are finding it difficult to follow suit, resulting in state-owned banks and other non-commercial banks directly intervening in the restructuring process.
Eun said the bank will continue providing financial assistance with shipbuilders to help them increase their exposure in the value-added shipbuilding and shipping business segments.
The results of the creditor banks-led restructuring has on the export potential of the economy is mirrored by a high share of export revenue in total revenue of Korean firms; 55 percent in manufacturing overall and 65 percent in the export-oriented manufacturing sectors (automobiles, electronics, petrochemicals, shipbuilding and steel), according to the data from the International Monetary Fund.
Eun said the bank is paying extra attention to improve its corporate governance and maintain transparent management practices in order to play a strong role in these "bad times."
Eximbank plans to increase its loan support to small- and medium-sized enterprises (SMEs) to 43 percent this year.
"Specifically, we have allocated 10 trillion won and 16 trillion won for loans to small firms and medium enterprises, respectively. This is up from 16.7 percent and 26.7 percent, year-on-year," the CEO said.
Eun said the bank will cut its heavy reliance on traditional business segments in the amount of its financial assistance by supporting more non "smokestack industries" such as energy and information technology.
The head of the Export-Import Bank of Korea (Eximbank) said the export credit agency will continue pushing ahead with its plans to further restructure the ailing shipbuilding and shipping industries.
"We don't see any procedural issues; however, the top priority is the bank has to take steps to agree and then swiftly implement the plans while ensuring an adequate social safety net to back up workers affected by the restructuring," the bank's CEO Eun Sung-soo said in a news conference in downtown Seoul, Wednesday.
Eun said the bank is talking with the Korea Development Bank (KDB) about a possible merger between Sungdong Shipbuilding and Marine Engineering and STX Offshore and Shipbuilding, though the CEO said no concrete plans have been made about that so far.
"As a debt holder, the bank has to be very considerate in handling this issue," Eun told reporters. STX is managed by KDB, while Sungdong is controlled by Eximbank. STX went into receivership in 2016.
"When benefits and costs of debt restructuring are considered jointly, it becomes apparent that the economic costs of debt restructuring, both the cost to the creditors and the employment impact, are fully offset in the medium term by more rapid output growth and higher hiring," the bank CEO said, adding shipbuilders which have been controlled by creditors' banks won't be allowed to accept contracts below market price due to worries over profitability.
Shipbuilding downturn
Over the last few years, Korea's leading shipbuilders have been reeling from evaporating order books and excess capacity and are implementing capacity and job cuts, on top of asset sales, to survive. Smaller and mid-sized shipbuilders such as STX and Sungdong are finding it difficult to follow suit, resulting in state-owned banks and other non-commercial banks directly intervening in the restructuring process.
Eun said the bank will continue providing financial assistance with shipbuilders to help them increase their exposure in the value-added shipbuilding and shipping business segments.
The results of the creditor banks-led restructuring has on the export potential of the economy is mirrored by a high share of export revenue in total revenue of Korean firms; 55 percent in manufacturing overall and 65 percent in the export-oriented manufacturing sectors (automobiles, electronics, petrochemicals, shipbuilding and steel), according to the data from the International Monetary Fund.
Eun said the bank is paying extra attention to improve its corporate governance and maintain transparent management practices in order to play a strong role in these "bad times."
Eximbank plans to increase its loan support to small- and medium-sized enterprises (SMEs) to 43 percent this year.
"Specifically, we have allocated 10 trillion won and 16 trillion won for loans to small firms and medium enterprises, respectively. This is up from 16.7 percent and 26.7 percent, year-on-year," the CEO said.
Eun said the bank will cut its heavy reliance on traditional business segments in the amount of its financial assistance by supporting more non "smokestack industries" such as energy and information technology.
