Go to Contents Go to Navigation

(2nd LD) Gov't urges Hanjin Group to be 'responsible' for crippled cargo shipments

All Headlines 14:46 September 05, 2016

(ATTN: UPDATES with comments on foreign businesses in paras 13-16, comments on Woori Bank sale, housing market in last 5 paras)
By Lee Chi-dong

SEOUL, Sept. 5 (Yonhap) -- South Korea's top financial regulator pressed the Hanjin Group on Monday to take full responsibility for the delivery of cargo under existing contracts signed by its affiliate Hanjin Shipping Co.

The nation's leading container shipping line filed for court receivership last week, succumbing to mounting debts amid an industry-wide slump. Many of the company's operations have since been crippled, with a number of foreign ports denying entry to Hanjin's ships.

Yim Jong-yong, chairman of the Financial Services Commission (FSS), described the handling of the freight stranded at sea as the "most urgent and difficult" issue for now.

Yim Jong-yong, chairman of the Financial Services Commission, speaks on the Hanin Shipping crisis and other pending issues during his meeting with reporters in Seoul on Sept. 5, 2016. (Yonhap)

"That is the Hanjin Group's problem," he emphasized in a monthly press briefing. "The Hanjin Group and majority shareholders should take social responsibility and resolve it."

Hanjin Shipping is still an affiliate of Hanjin Group, the 10th largest conglomerate in South Korea, and the shipper's largest shareholder Korean Air Lines belongs to the group, Yim pointed out, mentioning the name of the group's chairman, Cho Yang-ho.

With regard to the fate of the shipper, Yim noted it's a call by the court, not the government or creditors.

"What's most desirable, of course, is for Hanjin Shipping to regain vigor and revive itself. But many experts' view is that the possibility is low," he said.

If it's liquidated, the government's role is to minimize the impact to the competitiveness of South Korea's shipping industry, he said, adding in that sense, the government hopes that another local shipping line Hyundai Merchant Marine will acquire some of Hanjin's assets including its ships, workforce and overseas networks.

The government will continue to deal with the Hanjin matter in line with its principles for the restructuring of the industry, he said.

He also announced plans for extending financial support for the contractors of Hanjin Shipping, saying some funds from the newly-allocated supplementary budgets will be used to help those firms, especially small and medium-sized ones with relatively good financial health.

Hanjin Shipping has a total of 457 contractors here and it owes them a total of around 64 billion won (US$57 million).

South Korea's two policy lenders -- the Korea Development Bank and the Industrial Bank of Korea -- will roll over maturing loans to some of the companies and provide special credit guarantee, Yim said.

Minister of Oceans and Fisheries Kim Young-suk (3rd from R) listens to an official during his visit to a Hanjin Shipping container terminal in Busan on Sept. 5, 2016. (Yonhap)

Meanwhile, he vowed more efforts to improve the country's financial system to meet global standards and make it more convenient for foreign financial firms to operate here.

He was referring to the government's efforts to stop those foreign entities from withdrawing or scaling down their local operations.

The FSS and the finance ministry launched a joint task force last week, plus a quarterly meeting with the leaders of foreign financial companies.

"We will actively address regulations that do not meet the global standards," he said. "A comprehensive plan will be drawn up in December."

On the household debt problem, the top financial regulator said the related authorities will "faithfully and speedily" implement the package of inter-agency measures announced on Aug. 25 that revolve around the control of new apartment supply to curb mortgage loans.

There has been widespread skepticism over the effectiveness of the planned measures with housing prices continuing to soar even after the announcement.

The related authorities, Yim said, refrained from taking significant action this time against the demand of houses out of concerns that a sudden slowdown in the housing market will deal a serious blow to not only the construction sector but also the soundness of household debts.

"We will keep monitoring the situations" in close consultations with the land ministry to see if additional measures are needed, he said.

Household credit jumped 11.1 percent on-year to an all-time high of 1,257.3 trillion won as of end-June amid prolonged low interest rates and strong demand for new apartments, according to official data.

Yim also reaffirmed the government's resolve to privatize Woori Bank, saying it's well demonstrated in the ongoing process of selling the stake to several different buyers, which is a more realistic sale plan.

The state-run Korea Deposit Insurance Corp. (KDIC) holds a 51-percent stake in the bank, the nation's fourth biggest by asset, a legacy of a massive bailout program during the 1998-99 Asian financial crisis.

The KDIC, seeking to sell off a 30-percent stake in Woori, will receive a letter of intent for the bank's stake from interested investors by Sept. 23 with the goal of selecting successful bidders in November.

This undated file photo shows the headquarters of Woori Bank in Seoul. (Yonhap)


lcd@yna.co.kr
(END)

HOME TOP
Send Feedback
How can we improve?
Thanks for your feedback!