"The plan aims to lower the debt/equity ratio of each chaebol enough to warrant access to international financial markets at a reasonable cost," said a deputy spokesman Chung Duck-koo at the country's financial watchdog. The plans were scheduled to be publicly released but the conglomerates, known locally as chaebol, are expected to release some details on their own.

But analysts said the chaebol would demand debt concessions in exchange for slimming down and those concessions would deal another heavy blow to the domestic financial industry. They said creditors would eventually providemore debt relief, including loans-for-equity swaps, debt write-offs and a cut in interest rates.

"There are concerns that non-performing loans (NPLs) in the banking system will rise more during the process of the chaebol's reform," a research head at Hannuri Investment Securities Yi Seung-gook said. "The government needs to spend more money to clear NPLs than it had earlier planned to do." Major commercial banks acknowledged the concerns.

"As we are well aware of the problem, we are pushing the chaebol hard to cut off non-viable companies and to sell off assets to improve their financial structure," said an official at a local bank who asked not to be identified. Chaebol chiefs agreed last Monday with president Kim Dae-jung to halve the number of units they control, but so far only third-ranked Daewoo Group has stepped forward with any detail.

Daewoo Group said it would cut its debt-to-equity ratio to 198 per cent in 1999 from 343 per cent at end-1998, slash its units to 10 from the current 41, and exitthe electronics and telecommunications businesses. Daewoo and Samsung agreed with president Kim that Daewoo would take over loss-making Samsung Motors Inc, which would get the profitable Daewoo Electronics company in return. The other four groups -- Hyundai, Samsung, LG and SK -- were expected to follow Daewoo by announcing major reform plans ahead of the December 15 deadline.All five were expected to specify non-viable units which would be liquidated or restructured because they had large capital losses or could not make enough of an operating profit to cover their financial costs. But creditors were not expected to disclose the non-viable companies. The chaebol would also provide details on how they would attract foreign investments, clear cross payment guarantees and promote core competence. They are also supposed to provide details on how they would implement "big deals" or business swaps in six industries that have been suffering from over capacity as a result of excessive investments. Some scepticalanalysts said they questioned whether chaebol would really keep their plege."Chaebol are very clever.

They can always find a way to cope with new and strict government rules," said Lee Phil-sang, an economic professor at Korea University. But the government said it will try to tame the chaebol's appetite by starving them of debt.