Eight Korean banks’ credit exposure to Hyundai Heavy Industries (HHI), Samsung Heavy Industries (SHI) and Daewoo Shipbuilding & Marine Engineering (DSME) stood at KRW46.35trn as at end of 2016, down KRW5.36trn from KRW51.71trn in 2015, according to figures from Korea Enterprise Data cited by Yonhap.
The exposure for the top five banks in particular – KB Kookmin Bank, Shinhan Bank, Woori Bank, KEB Hana Bank and NH Bank – came up to KRW12.66trn as at end-2016, down KRW3.68trn from KRW16.34trn in 2015.
The reduced credit exposure was attributed to the banks’ efforts to improve the shipbuilders’ financial status through massive debt write-offs.
The creditors have urged the big three shipyards to push on with self-rescue restructuring plans, and the austerity measures include massive job cuts, executive pay cuts and disposing of non-core assets and subsidiary businesses.
The depressed state of the global oil and gas sector has led to a virtual halt in orders for offshore newbuilds such as drillships and FPSOs, the main product focus for the Korean yards.
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