S. Korea Details Market-Stabilization Plans

South Korea on Sunday announced a list of steps to restore lost confidence in its financial markets, shattered by the uncertain future of beleaguered Daewoo Group, which last week revealed that it was on the verge of bankruptcy.

The government package included plans to maintain a low interest rate policy, inject fresh funds into financial institutions that face a liquidity crunch and speed up sales of Daewoo’s assets.

“The government plans to remove any source of instability in financial markets that can be raised in connection with Daewoo Group’s restructuring,” Financial Supervisory Commission Chairman Lee Hun-jai told reporters after an emergency policy meeting.

Mounting concerns over the fate of the Daewoo empire dealt a heavy blow to South Korea’s financial markets Friday, sending long-term interest rates soaring and stock prices crashing.

The other participants of the meeting included Finance Minister Kang Bong-kyun, Bank of Korea Governor Chon Chol-hwan and Senior Presidential Secretary for Economic Affairs Lee Ki-ho.

Hours before the meeting, Daewoo founder and Chairman Kim Woo-choong apologized for the troubles his group has caused to the country and pledged to fully carry out his restructuring plans.

“Despite our various efforts, we sincerely apologize for raising concerns over Daewoo’s problems,” Kim said in a news conference.

“From now on, Daewoo will stabilize the liquidity problems it’s currently facing in active cooperation with creditors and complete its second-half restructuring plans by the year-end, through transparent and objective procedures,” he said.

It marked Kim’s first public appearance since the group revealed last week that it was on the verge of bankruptcy.

Daewoo Group said last week it had $5.7 billion in debt maturing in the next 10 days.