Starting next year, companies that experience serious workplace accidents will face penalties including reduced credit limits and higher interest rates on revolving credit facilities.
According to financial industry sources on Wednesday, the four major banks — KB Kookmin, Shinhan, Hana, and Woori — have completed revisions to their credit transaction agreements to reflect serious accident risks in corporate revolving credit facilities.
Shinhan and Hana banks are already implementing the revised terms, while Woori Bank will apply them from December 29 and KB Kookmin Bank from January 8.
The Financial Services Commission announced in August that it would reflect serious accident risks in financial services and has since requested banks to revise their terms and conditions.
Through these revisions, banks have made clear their policy to give significant weight to workplace fatalities and other industrial accidents in credit screening processes. Specifically, banks can reduce or suspend revolving credit facilities when media reports suggesting a significant decline in creditworthiness are confirmed, or when investigations or legal disputes that could affect credit ratings arise. This effectively allows banks to impose penalties even before court verdicts are issued.
The four major banks have also improved their internal credit rating models to apply higher interest rates to companies involved in serious workplace accidents by reflecting elevated credit risks.
However, banks are feeling the burden. The standards for determining the level of sanctions based on accident severity remain unclear. "There are no separate guidelines from authorities regarding financial penalties for serious workplace accidents," an official at a commercial bank said. "We have no choice but to take the most conservative approach."
