To expand financial supply for middle- and low-credit borrowers, financial authorities decided to increase the eligibility criteria for the 'Bridge Loan' from the current lower 30% credit score to 50%, and provide incentives to savings banks that handle 'Sunshine Loans' and 'mid-interest loans'.
Additionally, to address the decline in soundness due to the default of real estate project financing (PF) loans, the standards for mergers and acquisitions (M&A) will be temporarily relaxed. A '3rd and 4th PF normalization fund' with a scale of 1 trillion won will be established to address defaulted PF loans, and the establishment of a specialized company for non-performing loans (NPLs) in the savings bank sector is also being pursued.
On the 20th, the Financial Services Commission held a meeting in the Seoul Government Complex in Jongno, Seoul, to discuss the 'Measures to Enhance the Role of Savings Banks', which includes these contents. The meeting was chaired by Chairperson Kim Byung-hwan and attended by the Chair of the Korea Federation of Savings Banks and representatives from nine savings banks, along with related institutions such as the Financial Supervisory Service and the Korea Deposit Insurance Corporation.
The financial authorities expanded the supply criteria for the 'Bridge Loan' from 70% for those with credit scores in the lower 30% range to 70% or more for those in the lower 50% range. For savings banks handling 'Sunshine Loans', a weight of 150% will be applied when calculating the lending ratio within their business area, and incentives will also be strengthened by excluding 10% from loans when calculating loan-to-deposit ratios for private mid-interest loans.
To alleviate the excessive concentration of savings banks in the metropolitan area, the financial authorities decided to revise the regulation on mandatory lending ratios for savings banks that have business areas in both metropolitan and non-metropolitan regions. When calculating the lending ratio within the business area, a weight of 90% will be assigned to metropolitan lending and 110% to non-metropolitan lending to differentiate them.
The financial authorities are also promoting the establishment of a specialized NPL management company for the savings bank sector. The plan is to establish the NPL company in the second quarter of this year and transition it to an asset management company after the third quarter. Unlike other financial sectors, there is currently no specialized NPL company in the savings bank sector.
The M&A standards will be expanded to include those that fall within 'the last 2 years with asset soundness indicators in Grade 4 or lower' as targets for timely corrective measures. The BIS ratio condition will be increased from the current 9% to 11%. Chairperson Kim said, "We will rationalize the current M&A standards, which are being assessed as excessively strict, so that vulnerable savings banks in the metropolitan area can be included as additional targets for M&A."
In the second half of this year, the financial authorities plan to establish a 'Development Plan for Savings Banks' considering the polarization between large and small savings banks.
Chairperson Kim noted, "The recent upward trend in asset soundness indicators, such as the arrears rate of real estate PF loans, is slowing down," and emphasized, "To stabilize this trend, plans for the cleanup and restructuring of real estate PFs must be carried out without disruption, and efforts must continue to secure sufficient loss-absorption capacity through the accumulation of loan loss provisions and capital expansion."