State-run Korea Development Bank (KDB) is on course to increase its capital stock to 50 trillion won ($36 billion), up from the current 30 trillion won, in a government-backed strategy to bolster the financing for growth driver industries such as the semiconductor sector, according to market watchers, Thursday.
Also eased will be KDB’s lending limit to a business entity. It will be set to 25 percent of its equity capital, up from the current 20 percent.
Otherwise known as authorized stock, it encompasses all common stock and preferred stock a corporation is legally allowed to issue, as established by a company charter.
Central to the revision is an extended grim outlook for SK On, a battery manufacturing affiliate of SK Group. The chances of recovery for the loss-generating battery affiliate will be bolstered faster, as aided by KDB’s capital provision. This is due to the low possibility of a creditworthiness upgrade 커뮤니티 for debt-ridden SK Group with constrained borrowing capacity. SK Group’s chipmaking business saw an operating loss of 7.7 trillion won.
According to the Financial Services Commission (FSC), a debriefing with the ruling and opposition parties was concluded on the need to fortify KDB’s capital.
The issue will be advanced during subcommittee meetings of the National Assembly’s National Policy Committee.
Rep. Kim Tae-nyeon, a five-term lawmaker of the main opposition Democratic Party of Korea, has proposed a bill to increase the limit to 40 trillion won. A similar bill is anticipated from a ruling party lawmaker.
The financial regulator says the revision will translate into a substantial benefit for strong local semiconductor players, always hamstrung by limited lines of credit relative to their growth potential.
“More firms will be able to borrow greater amounts of money to fund their businesses without the need for legislative revisions,” the FSC said.