Hanbo Steel’s collapse exposed the 1997 Asian financial crisis in South Korea.
Hanbo Steel, a heavily indebted South Korean conglomerate, filed for bankruptcy in January 1997. Its failure revealed extensive borrowing, weak corporate governance, and allegations of political influence in lending decisions. Because Korean banks and companies carried large debts, the collapse raised doubts about the country’s financial system.
The crisis then deepened through failures and restructurings involving other Korean conglomerates, including Kia and Daewoo. Foreign lenders became less willing to roll over short-term loans, and South Korea’s reserves fell rapidly. In December 1997, the country agreed to a major International Monetary Fund rescue program.
Hanbo Steel was not the event that started the entire Asian crisis; pressure had already appeared elsewhere in Asia. The company is important because its bankruptcy became an early, highly visible sign of Korea’s vulnerabilities. The crisis involved currency, banking, and stock-market turmoil rather than a single exchange trading day.