S. Korean banks decide to revamp about 30 big firms

By Park Bo-ram
SEOUL, June 11 (Yonhap) -- South Korean banks decided Thursday to reschedule
debts or end financial support for around 30 troubled big companies after
concluding financial tests aimed at a sweeping corporate revamp.
Under the decision, top lender Kookmin Bank and others will stop financing for
nearly 10 nonviable companies and reschedule debts or extend more loans for about
20 more companies, sources said.
The creditors have been assessing the viability of 434 affiliates of local
business conglomerates with more than 50 billion won (US$39.8 million) in loans
in an effort to prevent their possible bankruptcies from jolting the economy.
"Debt workout processes will likely begin next week," said an official
representing the creditors. "The affected companies will face suspension in their
control of businesses."
The creditors are also expected to release their test results on smaller
companies with debts of less than 50 billion won by the end of June.
South Korea's corporate restructuring drive started amid growing fears over a
possible chain reaction of business failures, as the severe economic downturn is
feared to erode the financial health of the banking sector.
The Bank of Korea predicted that the local economy will likely shrink 2.4 percent
this year, the worst performance in more than a decade, pummeled by falling
exports and sluggish local consumption.
pbr@yna.co.kr
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