SEJONG, Dec. 28 (Korea Bizwire) – Loan guarantees among affiliates of South Korea’s large business groups sank in 2017 from a year earlier, the country’s corporate watchdog said Thursday.
The total corporate debt payment guarantees made among units of 31 conglomerates reached 257 billion won (US$239 million) as of May 1, down 20 percent, or 64.2 billion won, from 321 billion tallied a year ago, according to the Fair Trade Commission (FTC).
In September 2016, a new antitrust law put companies with assets of 10 trillion won or more on the FTC watch list. Those under FTC surveillance are restricted from making equity investments or offering loan guarantees to one another.
The FTC said six conglomerates were engaged in in-house loan guarantee practices — Nonghyup, Halim, OCI, GS, Doosan and Hanjin.
Such cross-loan guarantees have been banned in Asia’s fourth-largest economy since 1998, as they were regarded as one of the main reasons that brought about the 1997 Asian financial crisis.