DSME’s bankruptcy would have cost W13tr loss to policy banks: FSC chief

[THE INVESTOR] The head of South Korea’s top financial regulator said if Daewoo Shipping & Marine Engineering had gone bankrupt, the state-run Korea Development Bank and the Export-Import Bank of Korea would have incurred a loss of 13 trillion won (US$11.89 billion).

“KDB and KEXIM have extended a combined 14 trillion won to DSME. But we only set aside 1 trillion won for bad debt allowance. Which means if DSME had gone bankrupt, we would had to report 13 trillion won loss immediately,” said Yim Jong-yong, chairman of the Financial Services Commission on Sept. 8. 

His remark came in response to accusation by lawmakers that policy bank mismanaged DSME’s debt workout program, while only focusing on preventing loss for the state-run banks, during the parliamentary hearing on the shipping and shipbuilding industry.

“One of the reasons to normalize DSME was to hinder further loss incurred by state-run banks, which will prevent further financial troubles,” he said.

In response to criticism that the state-run bank’s overfunded debt-ridden DSME, Yim said it was for the survival of the shipper.

By Ahn Sung-mi (sahn@heraldcorp.com)