A $5bn deal to sell Daewoo Shipbuilding & Marine Engineering has collapsed after South Korea’s Hanwha Group failed to secure funds to take over the world’s third largest shipbuilder.

Korea Development Bank, the state-run creditor that is leading the sale of Daewoo, said that following a board meeting on Wednesday it had decided not to proceed with the sale of a 50.4 per cent stake to Hanwha, a domestic conglomerate.