Foreign Financial Institutions To Participate In Creditor Consultative Bodies

Foreign financial institutions operating in Korea have to join creditor consultative bodies formed to deal with companies showing signs of insolvency according to the new corporate restructuring promotion law, which recently passed the National Assembly. The Ministry of Finance and Economy said yesterday that it will draw up the decree containing such a clause and enforce it, starting at the end of August.

The decree included foreign financial institutions operating in Korea, credit guarantee funds, and technology trust guarantee funds, as creditor institutions obliged to participate in creditor consultative bodies. The corporate restructuring promotion law lists banks, insurance companies, investment companies, investment trust companies, the deposit insurance public corporation, and the asset management public corporation. The decree can designate additional financial organizations as creditor institutions.

A Ministry of Finance and Economy official said, ``We decided to specify the scope of creditors in order to fend off the problem of free rides through which creditor institutions seek for self-interests instead of participating in the restructuring and sharing the losses.``

Park Joong-Hyun sanjuck@donga.com