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Watchdog picks 176 firms for restructuring

South Korea's state financial watchdog on Tuesday selected a total of 176 local small and medium-sized enterprises (SMEs) for immediate corporate restructuring.

The Financial Supervisory Service (FSS) conducted a credit risk assessment of 2,035 SMEs here in a regular move taken under a related corporate law.

As a result, the 176 companies were put on the blacklist, a 28.5 percent increase from the average of 137 over the past three years.

The FSS said it has applied stricter criteria to the evaluation for "pre-emptive and active" corporate restructuring amid a continued economic slump in Asia's fourth-largest economy.

"It's the SMEs that are hit directly by a decrease in large firms' sales and business downturn," said Chang Bok-seop, director-general of the FSS's credit supervision bureau. "Most of the companies requiring restructuring are component manufacturers."

In particular, 14.8 percent of the 176 firms are from the shipbuilding, construction, petrochemical, steel and shipping industries, which are susceptible to business cycles, added the FSS.

The restructuring of the companies is expected to increase the burden for local banks.

Total credit extended by lenders here came to 1.97 trillion won ($1.7 billion) as of end-September.  (Yonhap)