National Policy Banks Step Up to Support Liquidity for Individual Companies (Comprehensive)

Discussion on Industry-Specific Inspection and Financial Support Plan for SanGyeongJang
SanEun and SuEun Inject 1 Trillion Won into Doosan Heavy Industries

[Asia Economy Reporters Moon Chaeseok and Cho Gangwook] The government has decided to lend 1 trillion won to Doosan Heavy Industries, which is facing financial difficulties, through policy banks.

On the 27th, the government held the "Ministerial Meeting on Strengthening Industrial Competitiveness (Sankyeongjang)" at the Government Seoul Office from 7:30 a.m. for about an hour, attended by Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki, Minister of Trade, Industry and Energy Sung Yun-mo, and Financial Services Commission Chairman Eun Sung-soo, to discuss financial support measures for Doosan Heavy Industries.

At the Sankyeongjang meeting, two agenda items were addressed: ▲checking the status of major industries such as manufacturing ▲financial support for Doosan Heavy Industries. The government confirmed that it would lend 1 trillion won to Doosan Heavy Industries, which is working to improve its financial structure due to worsening management, through KDB Industrial Bank and the Export-Import Bank of Korea.

The Ministry of Trade, Industry and Energy reportedly emphasized Doosan Heavy Industries' position in the industry regarding energy security and renewable energy, as well as the necessity of financial support during the meeting. KDB Industrial Bank and the Export-Import Bank of Korea are expected to hold their credit approval committees as early as today to process the support for Doosan Heavy Industries.

This Sankyeongjang meeting is the first outcome following President Moon Jae-in's announcement of support policies for large corporations at the Emergency Economic Meeting held on the 24th.

However, no additional support measures for large corporations in sectors such as aviation and refining were presented. A government official stated, "Given the economic difficulties caused by the novel coronavirus (COVID-19), the discussion at Sankyeongjang was focused on the government's first financial support related to the liquidity of individual companies."

Korean Air faces a corporate bond maturity of 240 billion won next month and is experiencing difficulties as domestic credit rating agencies have placed its corporate bond rating (BBB+) under review for downgrade.

If the loan is finalized, Doosan, the major shareholder of Doosan Heavy Industries, plans to provide its holdings of Doosan Heavy Industries' stocks and real estate as collateral for the loan agreement.

A Doosan Heavy Industries official explained, "We are not aware of any additional collateral-related matters mentioned at Sankyeongjang beyond the disclosures made the previous day." Policy banks have stated that they will consider support after reviewing Doosan Group's self-help measures.

Financial circles assess that even if policy banks urgently provide 1 trillion won in funds, it is far from sufficient to normalize Doosan Heavy Industries' current management situation.

This is because the total credit (loans and guarantees) extended to Doosan Heavy Industries by major banks already exceeds 3 trillion won.

An official from a creditor bank said, "The 1 trillion won support from policy banks this time is an emergency fund that is literally a 'drop in the bucket,' insufficient even to cover corporate bonds maturing within this year."

This content was produced with the assistance of AI translation services.