Request 100% reserve from financial institutions
Strict disciplinary action will be taken if dividends or performance bonuses are used.
▲ Lee Bok-hyun, Chairman of the Financial Supervisory Service. Yonhap News Agency Lee Bok-hyeon, head of the Financial Supervisory Service, said on the 23rd, “There is a need to eliminate insolvency in real estate project financing (PF) more quickly,” and expressed his intention to accelerate the ‘identification of the good and bad.’ He also warned, “We plan to closely inspect the provisioning status of financial companies as soon as the settlement of accounts is completed,” and added, “If they focus on short-term performance, avoid recognizing PF losses, and use the remaining financial resources as dividends or performance bonuses, we will hold them strictly accountable.” did.
At an executive meeting held at the Financial Supervisory Service headquarters in Yeouido, Yeongdeungpo-gu, Seoul on this day, Director Lee announced in detail the direction for resolving PF insolvency.
He said, “The need to liquidate real estate PF insolvency has increased as the PF delinquency rate at savings banks and other institutions has risen and the number of businesses at risk of insolvency has expanded. However, the resolution of insolvent businesses is progressing slowly, with the maturity of even businesses that are difficult to carry out normal business extended.” was diagnosed. He then emphasized the need to quickly eliminate insolvent PF businesses, saying, “If the liquidation of insolvent PF businesses is not accomplished, not only will the productive distribution of funds in the financial sector be hindered, but the virtuous cycle in the real economy will also be limited.”
In particular, Director Lee emphasized the need to accumulate sufficient PF-related provisions during settlement of accounts. He said, “In principle, for PF business sites with no business feasibility, such as bridge loans (fund loans in the early stages of business such as land purchase) that cannot be converted to PF for a long period of time, financial companies recognize 100% of the expected loss at the end of last year, accumulate provisions, and sell them quickly. ·It needs to be sorted out,” he said. He added, “For PF business sites where construction delays continue or the sales rate is significantly low, provisioning needs to be strengthened step by step, taking into account loss rates experienced in the worst situations in the past.”
The delinquency rate of PF loans in the financial sector rose from 1.19% as of the end of 2022 to 2.42% as of the end of September last year. In particular, savings banks are at a more serious level, having more than doubled from 2.05% to 5.56% over the same period. Accordingly, the Financial Supervisory Service plans to closely inspect the provisioning status of financial companies as soon as the financial statements are concluded at the end of last year. In this process, the Financial Supervisory Service plans to use all available means to hold people accountable if dividends or performance bonuses using remaining financial resources are discovered.
Reporter Min Na-ri
2024-01-23 18:25:44
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