According to financial sector sources on June 5, the Financial Commission has mandated that banks incorporate companies' serious accident histories into their credit assessments starting this year.
This initiative follows President Lee Jae-myung's strong criticism of Posco E&C last year after a fatal accident, during which he called for restrictions on bank loans to such companies.
As a result, the explosion at Hanwha Aerospace's Daejeon facility is being closely watched as a potential first instance of credit restrictions in the financial sector. In the first quarter of this year, Hanwha Aerospace reported short-term borrowings totaling 6.89 trillion won, with approximately 5.75 trillion won, or 83%, sourced from domestic banks. Major banks such as KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank, NH Nonghyup Bank, Industrial Bank of Korea, Export-Import Bank of Korea, Busan Bank, and iM Bank have provided operational and facility funding to Hanwha Aerospace. The company also has about 3.60 trillion won in long-term borrowings from these banks.
While there has been no administrative or judicial ruling against Hanwha Aerospace yet, creditor banks are closely monitoring the circumstances of the accident and any potential legal liabilities.
Banks evaluate both financial and non-financial factors when assessing corporate credit. Although financial metrics typically carry more weight, the increasing emphasis on environmental, social, and governance (ESG) management has led to a growing importance of non-financial assessments. Following President Lee's demands for stricter financial penalties on accident-prone companies last year, banks are now monitoring Hanwha Aerospace's compliance with the Serious Accident Punishment Act.
If Hanwha Aerospace is classified as a company violating the Serious Accident Punishment Act, it could face stricter loan assessments, reduced credit limits, more rigorous evaluations for loan extensions, and adjustments in interest rates.
A financial sector source stated, "While we need to consider financial factors, we cannot immediately withdraw loans. However, the non-financial assessments could negatively impact their standing. If it becomes clear that the facility has experienced frequent accidents and safety inspections have not been adequately conducted, it could lead to a downgrade in credit ratings and, in the worst-case scenario, loan withdrawals."
However, there are few precedents for applying the financial penalties under the Serious Accident Punishment Act to large corporations, making this incident a crucial test of the regulation's effectiveness.
Another financial sector source noted, "If we were to hastily withdraw loans, it could threaten the survival of partner companies. We will carefully consider the severity of the situation and the potential for improvement while strengthening our credit assessments."
A representative from the financial authorities remarked, "Once a public announcement confirms a serious accident, banks' credit assessments should be strengthened."
* This article has been translated by AI.
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