[Asia Economy Reporter Song Seung-seop] The Financial Supervisory Service (FSS) and the Ministry of Trade, Industry and Energy (MOTIE) have agreed to jointly respond to the growing potential risks caused by the "3 highs" (high interest rates, high inflation, and high exchange rates). When the financial sector identifies companies undergoing business restructuring and supplies funds, the government will provide streamlined procedures and consulting services.
On the 6th, MOTIE, the FSS, and the Korea Federation of Banks signed a mutual memorandum of understanding (MOU) at the "1st Business Restructuring-Banking Sector Linkage Strategy Meeting" held at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul. This MOU was signed based on a shared understanding that as potential risks increase, companies must secure competitiveness through business restructuring and thoroughly prepare for future industries. The meeting was attended by Lee Chang-yang, Minister of MOTIE; Lee Bok-hyun, Governor of the FSS; and Kim Kwang-soo, Chairman of the Korea Federation of Banks.
Business restructuring is a policy under the Corporate Vitality Act that promotes proactive structural improvement and innovation activities for healthy companies. Compared to restructuring that occurs after insolvency begins, it has the advantage of minimizing enormous social costs.
According to the agreement, banks will participate as business restructuring partnership institutions. Banks will utilize their corporate information and networks to identify candidate companies for restructuring and recommend them to MOTIE. Priority will be given to selecting companies in the "future car" sector, where industrial restructuring is urgent. The FSS and MOTIE plan to prepare and provide guidelines to facilitate banks' identification and recommendation processes.
Additionally, banks will reduce financial pressure on companies through methods such as maturity extensions and maintaining credit limits. This means they will avoid excessive fund recovery or limit reductions due to temporary financial weakening caused by business restructuring. Expansion of financial support will also be considered if necessary. During the restructuring period, exceptions will be made in banks' credit risk assessments to alleviate concerns about restructuring. Criteria for awarding additional points during the evaluation of main debtor groups will be established to ease the burden of financial structure improvement at the group level.
When banks recommend business restructuring companies, MOTIE's Productivity Headquarters will simplify the application process by providing consulting on application preparation. Generally, obtaining approval for business restructuring requires five steps, including consultation and document review, but this will be drastically reduced to two steps. Consulting support will be operated on a quota basis, with a certain portion prioritized for companies promoted by the banking sector.
Among the "Business Restructuring Implementation Strategy Consulting" services provided by MOTIE, 25-30% will be allocated to companies recommended by banks, and support through additional project funding will also be considered. However, this support will only be provided if banks have committed to expanding financial support for approved business restructuring companies.
Minister Lee Chang-yang stated, "To respond to the immediate 3 highs, the industrial and financial sectors will work as one team going forward," adding, "If the financial sector acts as an umbrella during the rain, MOTIE will focus on supporting companies' capabilities through R&D, consulting, and marketing."
Governor Lee Bok-hyun emphasized, "This collaboration is especially meaningful as the banking sector participates in government support policies," and added, "Since banks play a crucial role in supplying funds to our industry and companies are vital in production, investment, and employment, MOTIE and the FSS will join forces to overcome the crisis and become a catalyst for our nation's innovative growth."
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