FSC: Financial Support for Petrochemical Firms Only with Strong Self-Rescue Efforts

As the government has announced its policy for restructuring the petrochemical industry, financial authorities and the banking sector have also decided to lend their support. However, they have established the principle that financial support will only be provided if companies make thorough self-rescue efforts.

On the morning of the 21st, the Financial Services Commission held a meeting at the Korea Federation of Banks in Jung-gu, Seoul, to discuss the restructuring of the petrochemical industry. The meeting was attended by Vice Chairman Dae Young Kwon of the Financial Services Commission, Deputy Governor of the Financial Supervisory Service, NICE Credit Rating, BCG Consulting, the Korea Federation of Banks, the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup), Korea Development Bank, Industrial Bank of Korea, Export-Import Bank of Korea, Korea Credit Guarantee Fund, Korea Technology Finance Corporation, Korea Trade Insurance Corporation, and Korea Asset Management Corporation.

This meeting was held as a follow-up to the previous day's "Ministerial Meeting on Industrial Competitiveness Enhancement." Marking the signing of the "Voluntary Agreement for Business Restructuring in the Petrochemical Industry," the meeting aimed to share the current status of the petrochemical industry, discuss the direction of business restructuring within the industry, and establish principles for financial support.

Vice Chairman Kwon presented three basic principles for business restructuring: thorough self-rescue efforts, shared sacrifice, and swift execution. He emphasized that, in order to gain market trust and ensure successful restructuring, petrochemical companies must demonstrate "action" based on these principles, including painful self-rescue efforts and concrete, reasonable restructuring plans.

On the 20th, attendees including Minister of Trade, Industry and Energy Jung Kwang Kim, who participated in the "Voluntary Agreement Ceremony for Industrial Restructuring to Reignite the Petrochemical Industry" held at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, are taking a commemorative photo after the ceremony. From the front row left in a counterclockwise direction: Sangseob Na, CEO of Hanwha TotalEnergies; Kilsun Kang, President of Korea Petrochemical Industry Association; Sangmin Kim, Head of Petrochemical Division at LG Chem; Minister Kim; Youngjun Lee, President of Lotte Chemical; Jungwoon Nam, President of Hanwha Solutions; Iljun Park, Executive Vice President of Korea Chamber of Commerce and Industry; Imju Jung, CEO of Hyundai Chemical; Yeol Ryu, President of S-Oil; Seongwoo Heo, Vice President of GS Caltex. Photo by Dongju Yoon. 2025.08.20

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Regarding the financial sector, he stated that it should rigorously evaluate companies' self-rescue efforts and act as observers and supporters to ensure that reasonable plans are developed. He also requested that, until restructuring plans are finalized, financial institutions refrain from actions such as calling in existing loans, which would be akin to "taking away the umbrella when it rains."

Financial institutions agreed that, provided companies and their major shareholders make thorough self-rescue efforts and fulfill their responsibilities, and if the feasibility of the restructuring plan is recognized, support will be provided through a joint agreement among creditor financial institutions. When companies receive financial support under this agreement, the principle will be to maintain existing loans, but the specific details and level of support will be determined through discussions between the company and creditor financial institutions during the process of formulating the restructuring plan.

In his opening remarks, Vice Chairman Kwon stated, "The petrochemical industry is a key sector that forms the backbone of Korea's industrial competitiveness and is an industry we cannot give up." However, he also noted, "We can no longer postpone the necessary surgery." He added, "It is time to begin a restructuring process in which everyone participates."

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