South Korea’s financial watchdog said Thursday that it has placed 41 highly-indebted conglomerates under closer watch for debt reductions in order to prevent unexpected defaults.
According to the Financial Supervisory Service, the conglomerates that owe more than 1.3 trillion won ($1.2 billion) to local banks have been designated as heavy corporate debtors for this year, compared with 42 firms selected last year.
The FSS unveils the list of major highly-indebted large firms in April every year.
STX Group, Daesung Group and Booyoung Group were dropped from the list as they sold off affiliates and paid off debts amid restructuring. Meanwhile, Sinokor Merchant Marine Co. and Harim Co. were added to the list.
The outstanding amount of the 41 firms’ combined loans totaled 303 trillion won as of the end of 2014, up 7.4 percent from 282.3 trillion won tallied a year earlier. It accounted for 16.7 percent of all lending by local financial institutions.
The most heavily-indebted conglomerate is Hyundai Motor Group, which has 31.7 trillion won in debt, followed by Samsung Group with 29.6 trillion won and SK Group with 24.5 trillion won.
The FSS said it will closely scrutinize the firms’ financial health until the end of April and monitor their restructuring efforts throughout the year.
Local lenders have been struggling from snowballing corporate loan defaults worth tens of trillions of won as mid-sized companies including Keangnam Enterprises, Dongbu Corp., Taihan Electric Wire Co. and Moneual Inc. have become insolvent since last year. (Yonhap)
