KB News Desk
Some 21 trillion won ($15.7 billion) in short-term loans and loan guarantees extended to construction projects have been determined “risky” and may be subject to restructuring, the financial regulator said Thursday.
The amount accounts for 9.7 percent of the total 216.5 trillion won in real estate project financing (PF) loans and loan guarantees, according to the Financial Supervisory Service (FSS).
The finding is based on a review of PF loans and loan guarantees, worth 33.7 trillion won in total, that had had delayed payments or their expiration dates extended more than three times.
“The review, along with the improved evaluation standard (announced June 7), is expected to help remove uncertainties in the PF market as it has distinguished good from bad through objective evaluation of normal and risky projects,” the FSS said in a press release.
The financial regulator said the financial industry’s exposure to such risky loans will not cause any serious problem since most financial firms have been preparing for the worst, partly by boosting their loan-loss reserves.
“Still, for the soft landing of PF loans, financial firms need to actively resolve non-performing loans and delinquent loans as the non-performing loan ratio of PF loans has sharply increased by 6.1 percentage points since the end of last year to 11.2 percent as of end-June,” it said in a press release.
The financial regulator added the non-performing loan ratio of most financial firms will improve to a “stable level” in the second half of the year “should the restructuring and (PF loan) liquidation plan currently being prepared be implemented without fail.”
By sector, mutual trust funds are exposed to the largest share of 9.9 trillion won among the 21 trillion won of PF loans deemed risky, followed by savings banks with a 4.5 trillion-won exposure, securities firms 3.2 trillion won, credit finance companies 2.4 trillion won, insurance firms 500 billion won and commercial banks with a 400 billion-won exposure, according to the FSS.
The FSS said financial firms will come up with their own PF loan restructuring plans by Sept. 6, and that the financial regulator will check monthly their progress in implementing such plans. (Yonhap)
