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Photo = Yonhap news |
[Alpha Biz= Paul Lee] South Korea’s financial authorities announced that more than half of the KRW 23.9 trillion (approximately USD 17.5 billion) in distressed real estate project financing (PF) loans are expected to be resolved or restructured by the end of the first half of 2025.
The Financial Supervisory Service (FSS) stated on May 22 that a total of KRW 9.1 trillion in PF debt had been resolved or restructured as of the end of March, with an additional KRW 3.5 trillion expected to be addressed by the end of June. This would bring the total to KRW 12.6 trillion, or 52.7% of all distressed PF loans identified.
The initiative stems from evaluations conducted by the FSS since June 2024, during which all financial institutions were assessed for PF loan exposure. The “C” (caution) and “D” (high risk) ratings, which indicate the need for liquidation through public sales or restructuring through new capital injection, applied to KRW 23.9 trillion in loans.
The FSS expects the remaining KRW 3.5 trillion targeted for resolution in Q2 to be handled smoothly within the set timeline. Upon completion, the outstanding volume of distressed PF loans is projected to fall to KRW 11.3 trillion by the end of June.
Breakdown by sector shows the expected remaining exposures as follows: securities firms (KRW 1.9 trillion), savings banks (KRW 0.9 trillion), banks (KRW 0.1 trillion), credit card and leasing companies (KRW 1.3 trillion), insurers (KRW 0.5 trillion), and mutual finance institutions (KRW 6.7 trillion). Most sectors, excluding mutual finance, are projected to reduce remaining exposures to around or below KRW 1 trillion.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
