FSS lists Eland, Kakao in debt monitoring group

The Korea Times

The Korea Times

Finance

Tue, September 26, 2023 | 08:12

Economy

FSS lists Eland, Kakao in debt monitoring group

Posted : 2023-05-17 16:53

Updated : 2023-05-18 08:53

The headquarters of Financial Supervisory Service (FSS) in Seoul / Courtesy of FSS

By Anna J. Park

Retail tycoon Eland and Kakao, Korea's Big Tech conglomerate, have recently been included in the Financial Supervisory Service's (FSS's) debt list due to their respective high levels of indebtedness. They will be assessed by creditor banks for financial stability.

According to the FSS Wednesday, seven conglomerates, including Eland and Kakao, have been newly added to the watchdog agency's so-called main debt group list. The financial authority has produced the annual list since 1999 to prevent insolvencies of large conglomerates and to induce necessary restructuring.

When the entire debt of conglomerates and credit offerings of banks exceed a certain amount set by banking supervisory regulations, the FSS will add the organization to its list.

In total, 38 conglomerates have been named by the financial authority this year, each holding more than 2.07 trillion won ($1.54 billion) worth of debt, as of the end of last year, plus banking credit offerings of over 1.2 trillion won.

Compared with the 32 conglomerates from last year's list, seven conglomerates ― Eland, Kakao, Hyundai Department Store, Taeyoung Group, Hanon Systems, LX and DN ― have been added. These newly added conglomerates' increased debt was mostly due to increased investment and M&A strategies.

Dongkuk Steel Mill was removed from the list, as the firm repaid sizable debts last year and the group's entire amount of debt fell short of the required criteria.

Hyundai Motor topped the list for debt, followed by SK, Lotte, Samsung and LG. The five conglomerates' aggregate debt stood at 158.7 trillion won as of the end of last year, which accounts for 49.1 percent of the entire debt of the 38 groups. The amount is a 14.8 percent jump from the previous year.

When conglomerates are listed, bank assessments of their financial stability are required. Banks that hold most of the creditors of the groups will conduct thorough evaluations. The banks (creditors) will sign agreements with some of the subsidiaries of the debtors (conglomerates) that particularly need to improve, from a fiscal standpoint.

annajpark@koreatimes.co.kr