Saemaeul Geumgo Also Restricts Joint Loans Such as PF and Group Loans

[Asia Economy Reporter Eunju Lee] As NongHyup, ShinHyup, and SuHyup have all decided to simultaneously halt joint loans, Saemaeul Geumgo also decided to restrict joint loans starting from the 14th of last month. With the real estate market downturn and tightening of the capital market continuing, Saemaeul Geumgo has also begun full-scale risk management. However, unlike NongHyup, ShinHyup, and SuHyup, which have completely banned joint loans across all branches, Saemaeul Geumgo decided to determine loan suspension based on the scale of individual joint loan balances at each branch.

According to the financial sector on the 2nd, since the 14th of last month, Saemaeul Geumgo has been implementing management for branches with excessive proportions of joint loans. Under this management measure, each Saemaeul Geumgo branch cannot handle new joint loans if the joint loan balance exceeds 40% (35% in 2023) of the total loan balance of the branch as of the end of the previous previous month. For example, as of November 2nd, if a specific Saemaeul Geumgo branch A wants to handle joint loans, the joint loan balance at that branch as of the end of September must not exceed 40% of the total loan balance.

According to Saemaeul Geumgo, the restricted joint loans include large-scale loans such as real estate development PF (Project Financing) loans and group loans. Group loans are credits jointly executed for specific borrowers who meet certain qualification requirements. They are jointly executed with blanket approval without individual screening for new apartment sales or scheduled move-ins for reconstruction or redevelopment. Previously, mutual financial institutions such as ShinHyup Central Association, NongHyup Central Association, and SuHyup Central Association also decided to halt real estate development joint loans and apartment group loans starting this month.

Saemaeul Geumgo raised the loan threshold for risk management reasons. They viewed that as the real estate market downturn increases the number of borrowers unable to repay, it could lead to liquidity deterioration in the cooperative. Earlier, on the 27th of last month, Saemaeul Geumgo Central Association held a policy consultation meeting with the Ministry of the Interior and Safety to discuss response measures to financial market instability. Both organizations recognized that financial market instability is increasing due to interest rate hikes and expanded volatility in the real estate market, and agreed to strengthen loan screening and take measures similar to other mutual financial institutions as needed according to market conditions.

A Saemaeul Geumgo official explained, “Due to concerns about interest rate hikes and the real estate market downturn, risk management has begun within each financial sector. While some institutions have completely banned large-scale real estate loans, Saemaeul Geumgo judged that the portfolios and situations of individual branches and cooperatives differ, so they decided to allow judgment based on the capacity of each branch.”

This content was produced with the assistance of AI translation services.