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  • 작성자 : 권진현
  • 소속 : Korea International School Jeju official club BERA (Business Economics Review Associates)
  • 등록일 : 2025.02.14
  • Hanbo

Hanbo

by Hoyun (Taylor) Lee


In the 1990s, the Hanbo expanded its business through steel works and mergers and acquisitions. Its affiliates increased rapidly from 10 in 1993 to 22 in 1996. This rapid increase in affiliates represented the rapid growth of the Hanbo itself. As a result, Hanbo was able to reach 14th place in assets ranking by 1995.

Process of Bankruptcy
Hanbo’s strategy to increase the affiliates to grow itself seemed to be a success. This strategy was based on the idea of ‘Too big to fail.’ Hanbo believed that as long as they were huge in size, the Korean government wouldn’t let it fall. With the idea, Hanbo signed accommodation notes in the private loan market whenever it needed money to expand its business. Accommodation notes are written promising to pay back the bill. As those notes did not require any complicated procedure as banks, Hanbo invested and gained more and more affiliates without valid restrictions. Investment without restriction as well as the overuse of the accommodation notes led to the bankruptcy of Hanbo. As a result, Hanbo, one of the biggest companies in Korea, collapsed in 1997.

After the Bankruptcy
After the bankruptcy of Hanbo, the economy of Korea started to tremble. The fall of a big company caused the financial institutions to lower the risk and keep the money instead of lending it. This caused many other big companies to tremble as they weren’t able to lend money to invest or grow. Additionally, the accommodation notes, which were written by Hanbo, became a mere piece of paper causing the loss of companies and the market. The bankruptcy of Hanbo is thought to be one of the factors of the IMF crisis in Korea which happened in 1997 as it significantly damaged the economy of Korea.


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