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Financial regulator to seek market stability during restructuring

April 27, 2016
In this file photo taken at the meeting a panel set up to reform the country's financial markets held at the Korea Financial Investment Association in Yeouido, Seoul, on April 27, 2016, FSC Chairman Yim Jong-yong attends the meeting with a stiff expression on his face.

In this file photo taken at the meeting a panel set up to reform the country’s financial markets held at the Korea Financial Investment Association in Yeouido, Seoul, on April 27, 2016, FSC Chairman Yim Jong-yong attends the meeting with a stiff expression on his face.

SEOUL, April 27 (Yonhap) — South Korea will seek market stability as the country moves to restructure the financially-troubled shipping and shipbuilding industries, the chief of the financial regulator said Wednesday.

In a meeting with private-sector financial experts in Seoul, Financial Services Commission (FSC) Chairman Yim Jong-yong said, “In pushing forward the restructuring (of major industries to be spearheaded by subjected companies and their creditor banks), ensuring stability in financial markets should be put before anything else.”

His remarks came a day after the FSC announced stricter restructuring measures to help debt-ridden shipping and shipbuilding companies stay afloat in the short term and put their businesses back on track in the long term.

“As state-run banks hold most of the credit of companies facing tougher restructuring programs, non-state financial institutions need to seek innovative reforms and focus on honing their competitive edge,” Yim said.

If companies, particularly low-credit, small- and mid-sized ones, have difficulty in raising funds by issuing their corporate bonds in the markets, financial authorities will immediately support them with market stability measures, the chairman said.

“To help the low-credit firms raise operating capital, authorities (Korea Credit Guarantee Fund) will issue primary-collateralized bond obligations (P-CBOs) based on the underlying assets of their corporate bonds,” Yim said.

The government will hire a variety of measures to stabilize the financial markets during the planned restructuring process, he said.

Through P-CBOs, the government provided a total of 6.9 trillion won (US$6 billion) in financial support to firms from August 2013 through the end of 2015, the FSC said.

A CBO is a kind of structural asset-backed security.

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