Yegaram Savings Bank, which is experiencing poor performance due to the fallout from real estate project financing (PF) failures, is preparing to overcome the crisis with a foreign credit loan product.
According to the financial sector on the 15th, Yegaram Savings Bank plans to launch a credit loan product aimed at foreigners residing in Korea by the end of February. The interest rate is expected to be around 20% per annum. Since it is impossible to assess the credit rating of these foreigners, the interest rate is high.
Yegaram Savings Bank has decided to select and assign interpreters who can speak both Korean and foreign languages to consultation desks for this product.
This project is said to be led by Yeo Yong-hoon, the CEO of Yegaram Savings Bank. It appears that they have chosen the foreign credit loan business as a breakthrough due to declining performance driven by the deteriorating business environment from real estate PF failures and frequent changes in CEO.
As the number of registered foreigners nationwide increases, foreign credit loans are emerging as a new growth area for the financial sector. Jeonbuk Bank, which was the first in the banking sector to launch foreign credit loan services, reportedly had about 35,000 foreign borrowers at the end of 2023, with a balance nearing 400 billion won last year. Among savings banks, Welcome Savings Bank, OK Savings Bank, and KB Savings Bank are operating foreign credit loan products.
A financial sector official noted, "However, it seems necessary to pay attention to the fact that it is difficult to assess the repayment ability of foreigners because credit ratings cannot be established, and developing this separately requires time and expense."