April 24, 2024

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[THE INVESTOR] Korea’s top financial regulator on April 12 called for General Motors’ local unit and its labor union to reach an understanding on a turnaround plan, saying the government’s efforts are meaningless unless there is a deal.

Financial Services Commission Chairman Choi Jong-ku made the remarks at a meeting with the heads of banks to support subcontractors of GM Korea.

The Detroit automaker, which announced in February that it would shut down one of its plants in South Korea by May, has said GM Korea will file for bankruptcy unless its union agrees on a comprehensive cost-cutting deal by April 20.

Although the Korean government has made efforts to help resolve the GM Korea issue, Choi said such efforts would be meaningless unless GM Korea and its union make concessions.

The Korean government is also strongly pushing GM to take a “responsible role” to normalize its South Korean operations, Choi said.

During the meeting, Choi asked banks to pay special attention so as to prevent the financial situation of GM Korea’s subcontractors from worsening.

Financial authorities and state-run policy banks will also set up a task force to help support affected subcontractors.

After the meeting with Choi, Lee Dong-gull, governor of the state-run Korea Development Bank, told reporters that due diligence into GM Korea is likely to be completed early next month.

Lee voiced opposition against providing short-term funds to GM Korea at a time when negotiations between GM Korea and its union have produced little progress.

The banker said he has no plan to meet GM’s head of international operations, Barry Engle, or the union’s representatives for the time being.

GM has asked KDB, the second-largest shareholder of GM Korea, to offer financial support for its local subsidiary.

By Song Seung-hyun and newswires (ssh@heraldcorp.com)