Korea on the Load Ahead

Korea on the Road Ahead

MAIN CONTENT

Provide smooth operation for restructuring

  • Created restructuring task forces in each individual banks and monitored the restructuring process, and constructed a coordination system between government agencies for effective restructuring within January 2009
  • Arranged and substantiated the role of the Mediation Committee for Creditor Financial Institutions by employing a full-time Chairperson and a full service bureau within 1Q09

Liquidity support for the corporate sector

  • Supply sufficient liquidity to corporations by inspecting MOU agreements signed with major banks and providing credit through public credit guarantee institutions throughout the year
  • Support new car financing through Seoul Guarantee Insurance Company's guarantee program for new car financing bonds through the year

Alleviate tax burden for corporations by amending accounting standards

  • Made early adoption of international accounting standards that reduces currency losses for large corporations and initiated special currency translation procedures for unlisted companies as well within January

Provide solution for distressed real estate project financing

  • Inspect the status of real estate financing in banks and other financial sectors within 1Q09 and provide solutions for soft-landing and normalization of the industry throughout the year

Overall analysis of vulnerable industries followed by restructuring

  • Focused on main industries among these to preemptively detect the risk factors and provided solutions through industry specific strategic task forces within January
  • Promote market friendly restructuring through revitalizing the private equity fund industry within first half of the year

RECENT PROGRESS

Provide smooth operation for restructuring

  • Completed in creating restructuring task forces in each individual banks and monitored the restructuring process, and established the Real Sector Financial Support Council to coordinate between government agencies for effective restructuring within January 2009
  • Arranged and substantiated the role of the Mediation Committee for Creditor Financial Institutions by employing a full-time Chairperson and a full service bureau within January and formed the Creditor Banks Agreement to strengthen its role within February

Liquidity support for the corporate sector

  • Supplied sufficient liquidity to corporations through credit guarantees and aggressive policy measures which resulted in KRW 10 trillion rise in corporate loans within 1Q09
  • Reached an agreement with Hyundai/Kia Motors in product management and sales within 1Q09
  • Initiated debt guarantees for producers that supply parts to large corporations totaling KRW 9.2 billion in 55 cases involving 10 suppliers to Hynix Corp

Alleviate tax burden for corporations by amending accounting standards

  • Made early adoption of international accounting standards that reduces currency losses for large corporations such as tangible asset revaluation and functional currency system, and also initiated special currency translation procedures for unlisted companies through making amendments to the Korean Account Standards within January

Provide solution for distressed real estate project financing

  • Completed inspection of real estate financing in banks and other financial sectors and currently in the process of purchasing distressed project financing assets through the Korea Asset Management Corporation (KAMCO) normalizing the industry
  • *First Stage: (Mutual Savings Banks) December 2008
  • *Second Stage: (Banks and other financial companies) March 2009

Overall analysis of vulnerable industries followed by restructuring

  • Strengthened industry focused monitoring and teamed up with the Ministry of Knowledge and Economy to establish the 'Real Sector Financial Support Task Force' within December 2009
  • The task force expanded and led by the FSC Vice Chairman in March 2009
  • Established the Corporate Restructuring Fund and formed strategic plans for restructuring in March 2009

FUTURE PLANS

Provide smooth operation for restructuring

  • Carry out constant risk evaluation through individual banks and monitor the restructuring process (ongoing)

Liquidity support for the corporate sector

  • Monitor supply of liquidity to corporations and make adjustments where needed
  • Make preparations for extra financial support through policy financing institutions and state guarantee agencies before the supplementary budget gets passed the necessary proceedings to be implemented
    *2009 planned supplementary budget: CODIT (KRW 1.08 trillion), KIBO (KRW 0.52 trillion), IBK (KRW 0.3 trillion)
  • The 'New Car Financing Bonds' is planned to be established as soon as negotiations with labor unions finalize
  • The debt guarantees for producers that supply parts to large corporations will continue with Hynix Corp and will be expanded to other large corporations

Provide solution for distressed real estate project financing

  • Soft-landing and normalization of the industry is in full progress

Overall analysis of vulnerable industries followed by restructuring

  • Preemptively measures will be implemented through the 'Real Sector Financial Support Task Force'
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