Korea's banks and other financial institutions, especially the country's three major loan guarantee agencies, are to participate in a debt workout programme for small- and medium-sized businesses (SMEs).
Companies with debts of less than 50 billion won (US$43 million) are not included in current corporate restructuring programmes (see 4 June 2004: Banks exposed to SME default risk).
Some analysts have predicted that sluggish domestic spending in Korea and the rising number of loan defaults by smaller companies could trigger another economic crisis.
The Korea Federation of Banks said that the Korea Credit Guarantee Fund, the Korea Technology Credit Guarantee Fund and the Korea Export Insurance Corp have agreed to join the programme.
Eligible companies are those with outstanding debts of at least 5 billion won but less than 50 billion won.
