[Alpha Biz=(Chicago) Reporter Paul Lee] It has been confirmed that the nation's top five financial groups are losing at least 1 trillion won in valuation due to overseas real estate investment.

The five major financial groups (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) invested 782 cases in overseas real estate. The total principal of the investments executed by financial groups amounts to KRW 20.3868 trillion.

Hana Financial Group had the largest amount of investment principal with 6.2458 trillion won, followed by KB Financial Group with 5.6533 trillion won and Shinhan Financial Group with 3.999 trillion won.

Nonghyup Finance was 2.3496 trillion won and Woori Finance was 2.1391 trillion won.

The five major financial groups invested a total of 10.4446 trillion won in 512 investments, including profit securities and funds, excluding loan bonds.

KB Financial Group had the largest amount of investment other than loan bonds with 2.8039 trillion won (126 cases), followed by Shinhan Financial Group with 2.7797 trillion won (133 cases), Hana Financial Group with 2.6161 trillion won (157 cases), Nonghyup Financial Group with 1.8144 trillion won (55 cases) and Woori Financial Group with 430.5 billion won (41 cases).

Currently, the valuation value of these assets totaled KRW 9.3444 trillion, down KRW 1.1 trillion from the original principal. The overall valuation yield was -10.53%.

According to the valuation value against the principal of investment by financial groups, Hana Financial Group (-12.22%), KB Financial Group (-11.07%), and Nonghyup Financial Group (-10.73%) were less than -10%.

Shinhan Financial was -7.90% and Woori Financial was -4.95%.

Even if you look at the internal return rate (IRR) of the five major financial groups, which reflect cumulative dividends from overseas real estate investment, the loss was not small. Of the 514 investments that can be calculated by IRR, about 10% (51 cases) were negative.

KB Securities invested 17.968 billion won in a commercial building in New Jersey in October 2014 in the form of beneficiary securities, with only 1.075 billion won currently valued.

The valuation yield was only -94.02%, and even if the cumulative dividend of KRW 9.711 billion was reflected, the IRR was low at -14.14%.

Shinhan Investment & Securities invested KRW 21.8872 billion in beneficiary securities, which formed a portfolio of 30 hotels across the U.S. in December 2020, with its current valuation falling to KRW 1.67 billion.

Assuming that the current assessment amount is recovered on the base date, the IRR is -63.30%.

Hana Financial Group and Nonghyup Financial Group were hit hard by the same U.S. commercial real estate at the same time. It's the 20 Times Square building in downtown Manhattan, New York.

Hana Insurance invested 11.4242 billion won in the building in June 2018 as a beneficiary certificate and lost the entire amount. Although it took some 450 million won in dividends, the IRR was unusually low at -98.49%.

Many of the top five financial groups' overseas real estate investments have been implemented since 2020.

 

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