As a result of the restructuring and reorganization of troubled real estate project financing (PF) in the financial sector, which has continued since last year, about 40% of the total troubled business sites have been resolved.
A deputy governor of the Financial Supervisory Service (FSS) announced the performance of the normalization of real estate PF in the financial sector on the 22nd. The FSS reclassified the viability of real estate PF in June of last year. As of the end of last year, troubled real estate PF amounted to 23.9 trillion won.
As of the end of March this year, about 9.1 trillion won (38.1%) of the troubled real estate PF was either resolved or restructured. The FSS explained that by the end of the first half of the year, 12.6 trillion won (52.7%) is expected to be resolved or restructured.
The FSS plans to conduct on-site inspections or guide the accumulation of loan loss provisions for individual financial companies where normalization efforts are lagging. A deputy governor noted, "We will look into whether there were any shortcomings in the credit processing review process and post-management, and why the troubles occurred."
Since the second half of last year, the FSS has encouraged the resolution and reorganization of business sites that have been in arrears for more than three months. In January of this year, it disclosed a list of business sites for sale on the websites of various associations and established ways to exchange information. Additionally, it held joint briefing sessions for the financial sector and construction industry officials twice in January and March.
The FSS stated that it would not prevent new real estate PF transactions in the financial sector. A deputy governor remarked, "The purpose of normalizing troubled real estate PF is to divest troubled assets and replace them with sound assets," adding, "We have communicated to financial companies several times that if they have resolved their troubled assets, they can acquire new sound assets." He further noted, "I hope financial companies will sort out troubled assets and fill them with sound assets to restore the funding function for the construction industry."