The Financial Services Commission (FSC) held a meeting with commercial banks in Seoul on April 13 and adopted new corporate restructuring guidelines, which are characterized by corporate restructuring being led by the private sector instead of public.
According to the guidelines, commercial banks are allowed to take the lead in pursuing the restructuring of companies that have their money. This is to make up for the weak points of the current credit risk assessment conducted by the banks, including the difficulty of reaching a rational and objective evaluation and much time required for the selection of restructuring targets. In this context, the banks are planned to change the ways their credit risk assessment committees work within the first half of this year and then improve their credit risk assessment models in the latter half.
At the same time, systems are to be prepared so that companies can change hands with ease during the course of restructuring based on fair and transparent corporate bond price calculation. These systems include a platform on which creditor banks reveal the current statuses of companies undergoing restructuring and buyers can choose based on the data. The establishment of this platform, which is scheduled to be completed within the first half of this year, is to be led by state-run financial institutions such as the Korea Development Bank (KDB) and the Industrial Bank of Korea (IBK) before it is spread to the private sector in stages. To this end, the financial authorities raise a corporate restructuring fund of eight trillion won for five years to come. 50% of the fund is to be raised by state-run banks and the rest by commercial banks so that companies can be better restored after restructuring.
“The new guidelines are to diversify the ways of corporate restructuring by means of pre-packaged plans, capital market-based restructuring and so on in step with the ongoing changes in financial market conditions,” the FSC chairman Yim Jong-yong explained.