April 29, 2024

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[THE INVESTOR]  The latest decision of debt-ridden Hanjin Shipping’s creditors to stop financing it will not greatly affect the finance industry as the lenders have already made allocations for bad debts to protect themselves from the fallout, market watchers say.

According to local news report on Aug. 30, the creditor banks -- which include state-run Korea Development Bank and KEB Hana Bank -- extended a combined 1.02 trillion won (US$912.48 billion) loans to South Korea’s top container carrier.

Related story: Hanjin Shipping faces possible court receivership
 

The largest lender KDB has credit exposure of 660 billion won, followed by KEB Hana Bank with 89 billion won, NH NongHyup with 85 billion won, Woori Bank with 69 billion won, KB Kookmin Bank with 53 billion won and the Export-Import Bank of Korea with 50 billion won, according to the report.

Non-banking lenders have extended around 100 billion won of loans to Hanjin Shipping.

KDB and other banks have already assigned reserves to cover potential loan losses as their lending will be classified as bad debts once Hanjin Shipping enters court receivership, industry insiders say.

Creditors on Aug. 30 unanimously decided to stop supporting Hanjin Shipping, saying its latest self-rescue plan did not fulfill the requirements. With the halted financing, the shipper is left with no option but to file for court receivership.

By Ahn Sung-mi (sahn@heraldcorp.com)