Korean regulators unveil $10b fund to support distressed shipping loans

State banks will be recapitalised.

South Korean regulators will create an 11 trillion won (USD 10 billion) support fund to support two state-run banks which are most exposed to distressed shipping and shipbuilding companies, according to a statement from the Ministry of Stategy and Finance (MOSF).

The two banks—Korea Development Bank (KDB) and the Export-Import Bank of Korea (Kexim)—will be funded through government contributions and loans from the Bank of Korea.

The fund will be used to buy hybrid bonds issued by the policy banks involved in the restructuring.

The government will also work on the fast restructuring of shipping and shipbuilding companies. The three largest shipbuilders—Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering—are also required to submit "self-rescue" restructuring plans.