The Korea Savings Bank Association announced on the 26th that it has organized approximately 1.2 trillion won in distressed project financing (PF) bonds through the fourth joint fund in the second quarter of this year. This is a large-scale measure following the organization of about 200 billion won through the third joint fund in the first quarter.
In particular, among the business sites targeted by this fourth joint fund, 100 billion won has already been sold through public auction bids and negotiated contracts during the fund formation process, which is expected to result in the organization of a total of approximately 1.3 trillion won in distressed bonds. The association projected that the overall delinquency rate in the industry would improve by about 1.2 percentage points and the delinquency rate for PF-related loans would improve by approximately 5.8 percentage points as a result of the organization of distressed bonds through this fourth joint fund.
The savings bank industry plans to continue to organize distressed PF assets through various methods such as revitalizing public auctions and amortization in the future. The association plans to push for the establishment of the fifth joint fund in the second half of this year, considering the real estate market conditions and the speed of distressed asset organization by savings banks. Additionally, in the third quarter, a professional company for managing non-performing loans (NPL) will be established to provide a constant channel for resolving distressed debts.
Oh Hwa-gyeong, the president of the Korea Savings Bank Association, noted, "The savings bank industry has been working to sell distressed PF assets through various self-help measures such as public auctions, but there have been limitations to sales due to a lack of market demand and difficulties in negotiations with major investors. We expect that the joint fund will play a significant role in addressing these issues and in the organization of distressed assets for savings banks."