Evaluation Results

Creditor banks announced today a total of 65 companies for restructuring after completing their credit risk evaluations on 1,985 companies with outstanding credit lines of more than KRW50.0 billion.

Of the 65 companies, 16 were constructors with 9 rated C and 7 rated D; 3 shipbuilders with 1 rated C and 2 rated D; 1 shipping company rated C; and the remaining 45 large companies of which 27 were rated C and 18 rated D.

Mainly as a result of the downturn in the construction industry, 16 companies were tapped for restructuring while the number of shipbuilding and shipping companies selected for restructuring fell from 17 last year.

The Korean government is giving full consideration to help the restructuring process move forward as fast and effectively as possible while minimizing the weight of restructuring on the companies’ subcontractors.

Impact on Financial Company Soundness

The debt obligations of the 65 companies tapped for restructuring in this latest evaluation was KRW16.7 trillion, including KRW6.8 trillion in constructors PF contingent liabilities. Of the total, KRW11.9 trillion was due to banks, KRW1.5 trillion to savings banks, and KRW700 billion to credit specialized financial companies.

Additional reserves for bad debts that financial institutions are expected to set aside for this round of restructuring is around KRW3.0 trillion, but its impact on financial companies’ soundness should be limited given banks’ strong financial position to absorb losses. As of end-March 2010, domestic banks’ BIS ratio was 14.7%, up from 12.31% as of end-2008 and 14.36% as of end-2009.

Currently banks’ had KRW2.2 trillion in reserves set aside for bad debts while savings banks had KRW200 billion and other financial institutions KRW600 billion.

*Please read the attached file for details.