Banks To Accelerate Disposal of Poor PF Loans

South Korean banks are set to speed up the disposal of bad construction project loans in an effort to make their balance sheets cleaner, Yonhap News Agency reported on Sunday.

The move comes as the nation’s financial authorities are pushing local financial institutions to remove poor project financing (PF) loans, which experts say could emerge as a threat to the financial industry.
Meanwhile, Yonhap quoted a source and reported, Woori Banks, the country’s second-largest lender, plans to eliminate 1.9 trillion won ($1.7 billion) in PF loans this year.

It will likely sell those distressed PF loans through Korea Asset Management Corp. (KAMCO), the state-rum debt clearer, or UAMCO, Ltd., a private company specializing in bade debt clearance.

Kookmin Bank is also planning to sell 570 billion won in toxic PF loans out of its total distressed loans worth 760 billion this year, Yonhap News reported.
According to the latest date by the Financial Supervisory Service, the country’s watchdog, 18 banks had 38.7 trillion won in PF loans overdue for three months or longer, or 16.4 percent of their total PF lending, as of the end of December.

(아주경제 송지영 기자)

AJP