South Korea said two state-owned banks will shift some 14.3 trillion won ($12.54 billion) in yearly lending and investment from larger companies to start-ups and small- and medium-sized enterprises by 2018, a move spurred on by some huge corporate losses and a darkening economic outlook.
Korea Development Bank and the Industrial Bank of Korea also will move 9.9 trillion won in yearly lending and investment by 2018 from established industries such as shipbuilding and automobiles to growth industries such as wearable tech, regulator Financial Services Commission said in a statement on Sunday, LiveMint reported.
The South Korean government recently has pushed to tackle mounting corporate debt in Asia’s fourth-largest economy that is partly due to huge losses in companies state banks have controlled or funded for years, such as Daewoo Shipbuilding & Marine Engineering, the world’s largest shipyard by orderbook.
KDB and state-run Export-Import Bank of Korea said last month they would provide about 4.2 trillion won ($3.68 billion) in a rescue package for Daewoo, which employs more than 40,000 people including subcontractors.
But with domestic economic indicators worsening, China’s growth slowing and higher US interest rates looming, the regulator said state-run banks need to do more to restructure “zombie” corporations and focus funding on start-ups and growth areas instead.
