Financial Supervisory Service(FSS) chief Lee Bok-hyun said the financial watchdog is closely monitoring Homeplus, a hypermarket chain in South Korea.

Speaking at a meeting with the heads of brokerage firms Wednesday, the FSS governor said Homeplus has a poor financial structure and has had considerable operating losses for several fiscal years.

Lee added that the FSS is monitoring in particular payment settlement companies in business with Homeplus, as well as external debt loans.

The FSS governor said Homeplus entering court-led rehabilitation amid a credit crunch won’t lead to large-scale losses in the financial sector.

However, he stressed that the financial watchdog is reviewing contingency plans depending on the impact on the market.