Choi Sang-mok Steps in to Resolve Taeyoung Construction Crisis, "Additional Market Stabilization Measures If Needed" (Comprehensive)

"Limited Impact of Taeyoung Construction Exposure on Soundness"
"One-Year Debt Repayment Deferral for Partner Companies"

Choi Sang-mok, Deputy Prime Minister for Economic Affairs and Minister of Economy and Finance, held a meeting regarding the workout (corporate restructuring) of Taeyoung Construction and stated, "We will minimize the impact on our economy and financial markets," adding that the current market stabilization measures, which stand at around 85 trillion won, will be expanded further if necessary.

On the 29th, Deputy Prime Minister Choi held a macroeconomic and financial issues briefing at the Korea Federation of Banks building with the so-called 'F(Finance)4' members, including Lee Chang-yong, Governor of the Bank of Korea, Kim Ju-hyun, Chairman of the Financial Services Commission, Lee Bok-hyun, Governor of the Financial Supervisory Service, as well as Park Chun-seop, Senior Secretary for Economic Affairs. They focused on reviewing the financial and foreign exchange market situation and its impact following Taeyoung Construction's workout application. Taeyoung Construction, a mid-sized company ranked 16th in construction, applied for a workout yesterday after failing to resolve liquidity issues related to real estate project financing (PF).

Newly appointed Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok is attending the Macroeconomic and Financial Meeting held at the Bankers' Hall in Jung-gu, Seoul on the 29th. The meeting was attended by Lee Chang-yong, Governor of the Bank of Korea; Kim Ju-hyun, Chairman of the Financial Services Commission; Lee Bok-hyun, Governor of the Financial Supervisory Service; and Park Chun-seop, Senior Secretary for Economic Affairs. Photo by Jo Yong-jun jun21@

Deputy Prime Minister Choi said, "The creditor group, led by the main creditor bank, the Korea Development Bank, will adhere to strict restructuring principles based on Taeyoung Group's strong self-help efforts and discuss plans for normalizing Taeyoung Construction's management," adding, "We will make every effort to ensure that the impact on our economy and financial markets is minimized during this process."

First, there is a plan to sufficiently expand market stabilization measures to stabilize the financial market. Deputy Prime Minister Choi said, "Market stabilization measures have been operating at a level of 50 trillion won plus alpha since last October following the Legoland incident, with additional support measures for real estate PF and construction companies being sequentially added, currently operating at around 85 trillion won," and added, "If necessary, we will further expand these measures to proactively prepare for potential increases in market volatility." If needed, the Bank of Korea will also support liquidity through open market operations.

He also encouraged the financial sector to increase provisions. Deputy Prime Minister Choi stated, "Exposure related to Taeyoung Construction accounts for about 0.09% of the total assets of the financial sector and is dispersed across many financial institutions, so the impact on soundness is expected to be limited," but added, "We will encourage the financial sector to proactively prepare for uncertainties by accumulating provisions themselves." For real estate PF projects that can be normalized, liquidity will be supplied in a timely manner, and project restructuring will be promoted through agreements with the main creditor groups.

Full measures will also be taken to protect homebuyers and partner companies. Deputy Prime Minister Choi said, "For the 22 projects with sales contracts, we will support smooth occupancy by ensuring the proper fulfillment of sales, and if necessary, we will do our best to protect homebuyers by refunding sales payments through the Housing and Urban Guarantee Corporation (HUG)'s sales guarantees," adding, "For the 581 partner companies, we will ensure timely payment of subcontracting fees and actively support some subcontractors highly dependent on Taeyoung Construction's sales by deferring debt repayment to financial institutions for one year or reducing interest rates."

Deputy Prime Minister Choi said, "Based on close policy coordination, we will thoroughly manage potential risks and respond boldly and swiftly," and requested, "We ask for the cooperation of market participants to prevent excessive and unnecessary market instability."

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