[SEOUL] South Korea's finance minister said on Wednesday the government and the Bank of Korea will create a 11 trillion won (S$12.8 billion) fund in order to support two state-run banks most exposed to the shipping and shipbuilding firms currently undergoing restructuring.
"The fund to support these banks with capital will be formed through a loan from the Bank of Korea and contribution from the government," Finance Minister Yoo Il-ho said in opening remarks for a meeting to discuss plans on the corporate restructuring.
"We are planning for the fund to later buy hybrid bonds from state-run banks."
The two state-run banks that will be capitalised are Korea Development Bank (KDB) and the Export-Import Bank of Korea (Kexim).
Mr Yoo added the top three shipbuilders have also come up with a 8.4 trillion won plan to cope with difficult market conditions, which they see lasting for two to three years ahead.