Gov't not to intervene in Hyundai crisis

The government will not directly intervene in the Hyundai crisis, allowing creditors and the Hyundai group to resolve the situation independently. Subsequently, the Financial Supervisory Commission (FSC) which has been directly pressuring Hyundai to address its financial woes, will now retreat and permit Korea Exchange Bank, Hyundai`s main creditor, to advance to the frontline.

A high level FSC official revealed August 8 that the new economic team has resolved to keep the government at arm`s length from the Hyundai problem and to allow the creditor banks and the Hyundai group to settle their problems autonomously.

Soon after the cabinet reshuffle was concluded, Finance Minister Jin-Nyum, Chong Wa Dae economic chief advisor Lee Ki-Ho and FSC head Lee Keun-Young held a morning meeting August 7, in which they decided to keep government intervention to a minimal level. On the same night, the FSC head assembled a meeting of high-level FSC officials to inform them that the government should not meddle in the Hyundai crisis, instead leaving it for Hyundai and its creditors to resolve.

However, the MOFE announced on August 8 that the government has no intention of backing down, and maintained that Hyundai should produce a rehabilitation plan that the market can embrace soon.

The Korea Exchange Bank sent an official letter to Hyundai calling on the conglomerate to submit a definitive rehabilitation plan by August 19 in order to recover its credibility in the eyes of creditor banks and the market. KEB also demanded the spinoff of the group`s automotive and heavy industries arms and the dismissal of members of management responsible for poor operations. In addition, the KEB called for Hyundai to secure liquidity by disposing of its real estate and equity holdings.