S. Korea vows to minimize impact from Hanjin's court protection

SEJONG, Aug. 31 (Yonhap) -- South Korea's finance minister pledged Wednesday to minimize the fallout from Hanjin Shipping Co. filing for court receivership.

Finance Minister Yoo Il-ho said the move by the cash-strapped shipping line could have a limited impact on the stock and bond markets as well as the soundness of banks, as risks posed by Hanjin Shipping have already been factored into the financial markets.

He made the comments in a meeting with relevant ministers on how to strengthen South Korea's industrial competitiveness.

Local banks' credit exposure to Hanjin Shipping is estimated at 1.02 trillion won (US$914 million), but they have already set aside sufficient provisions against the loans.

The outstanding amount of bonds sold by Hanjin Shipping reached 1.2 trillion won as of end-June.

Hanjin Shipping filed for court receivership on Wednesday, a day after its creditors rejected its request for fresh funds. The company has been suffering worsening financial health stemming from a continued fall in freight rates amid the global economic slowdown.

Yoo said South Korea's shipping and ports industry could face difficulties at least two to three months following Hanjin Shipping Co.'s filing for court receivership.

"The government will mobilize all available policy tools, including short-term emergency measures for transport, to minimize the expected damage in the shipping and ports industry," Yoo said.

He also vowed to provide assistance to relevant companies to ensure that Hanjin Shipping's move will not hurt Asia's fourth-largest economy.

South Korea's exports fell by more than 10 percent in July. It marked a record 19th straight month that exports decreased since January 2015.
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