The nation’s top financial regulator on Wednesday refuted criticism on its exclusion of Daewoo Shipbuilding and Marine Engineering from the latest credit screening process, adding that the ailing company is not exempted from government monitoring and remains a big problem.

“The financial authority is well aware of the fact that DSME is a company in need of intense corporate restructuring and it is already under one of the toughest self-correcting plans,” said Yim Jong-yong, tge chairman of the Financial Services Commission at a monthly press conference at the Press Center in Gwanghwamun, central Seoul. 


“Since the shipbuilder is already going through a creditors-led restructuring process under the government’s three-track guidelines for corporate rehab, we saw no need to analyze the company’s credit risks and classify it again.”

There has been growing speculation about the debt-ridden shipbuilder after it was excluded from the list of cash-strapped businesses assessed by the regulator.

According to government guidelines on corporate restructuring established in April, DSME belongs to Track 1 plans aimed at normalizing management of industries considered “sensitive” to economic cycles, including the shipbuilding and shipping industries.

Under Track 1 plans, DSME, Hyundai Heavy Industries and Samsung Heavy Industries are carrying out a total of 10.3 trillion won worth of self-help measures to put their businesses back on track, the financial policy chief said.

However, critics pointed out that the FSS excluded DSME from the list of 32 companies facing restructuring announced Sunday.

The FSS analyzed credit risks of 605 firms with over 50 billion won debt and chose 32 that are most financially insecure. Hanjin Shipping and Hyundai Merchant Marine received a C grade by the FSS. Companies rated C need to apply for workout programs, while those given D are recommended to apply for court receiverships.

The credit risk-based analysis is part of Track 2 of the government’s overall restructuring guidelines, Yim highlighted.

The FSS started conducting the analysis in late 2015 and decided to hold it every six months with an aim to curb the rising number of so-called “zombie businesses” amid the economic slowdown.

“Because DSME wasn’t given a grade in the FSS analysis, it doesn’t mean it is a healthy entity,” Yim said. “Since the restricting issue of the company is so huge that such rating seems inadequate.”

The chairman also said the delay in the delivery of two drill ships to Angola’s state-run oil firm Sonangol is a concern for the financial authority, and will resolve the problem through negotiations with a number of financial partners. The African company, which initially agreed to pay $990 million of contract fees when taking over the ships, has postponed to take them, citing financial woes and issues with creditors.

As for the FSC’s top priorities for August, Yim mentioned its plans to boost the money market and launch an open financial platform for financial technology start-ups.

“The local money market is run largely by short-term repurchase paper that last just one or two days, exposing the market to high uncertainties,” he said. “The government will hold a public hearing on measures to encourage investors to maintain the RP for a longer period than next Wednesday and improve related laws.”

The Open Platform for Fintech, slated for launch on Aug. 30, will provide local fintech start-ups with open application programming interface -- known as Open API -- which will help the firms develop fintech applications that are compatible with internal programs of existing financial institutions.

A total of 16 banks and 25 securities brokerage firms will take part in establishing the platform.

By Song Su-hyun (song@heraldcorp.com)