‘Court receivership was right decision for Hanjin’: FSC chief

The government strictly maintains that principles regarding industrial restructuring and its decision on Hanjin Shipping’s court receivership were reasonable, according to South Korea’s top financial regulator on Tuesday.

At a year-end luncheon with press, Yim Jong-yong, the chairman of the Financial Services Commission, reiterated that his commission complied with the restructuring principles and asked for patience to see how the country’s shipping industry will transform in the near future.

“Surgical operations on Hanjin Shipping have just finished, and it needs some time to recover,” Yim said.

The FSC under Yim’s leadership has been denounced for leaving Hanjin, once the largest shipping firm in the country, to file for court receivership without due financial help. Some critics say the financial authority made a wrong decision on Hanjin due to lack of knowledge on the shipping industry.

In response to criticism, the FSC chairman said, “The shipping industry has a myriad of problems and it is impossible to predict when the game of chicken will end.”

Hanjin owned just five old vessels without debt of the total 166 ships, including 95 rental ships. The shipping company had about 2.5 trillion won ($2.07 billion) debt for the remaining 55 ships, the chairman said.

“It would cost the government about 4 trillion to 4.6 trillion won until 2019 in order to keep Hanjin afloat,” Yim said. “It seemed unrealistic and undesirable to pay that much for a particular industry.”

Hanjin had no healthy assets at all, making it impossible to save any small piece of the company, the chairman said.

As for the shipbuilding industry, the financial chief showed little hope.

“The shipbuilding industry is forecast to start recovering from 2018,” he said. “For Daewoo Shipbuilding & Marine Engineering, the government will support the shipbuilder to make better self-correcting efforts.”

The government will not seek efforts to artificially merge or split the current three shipbuilders, he added.

By Song Su-hyun (song@heraldcorp.com)