PF Daejudan Supports 66 Business Sites... Agreement Applies to 91 Sites

Agreement on 1 Trillion Won Real Estate PF Normalization Fund... Operation Starts in September

As of the end of June, it was found that 66 real estate PF sites received financial support for business normalization through the 'Real Estate Project Financing (PF) Lender Group Agreement.' Authorities evaluate that the domestic real estate PF insolvency is being orderly normalized and plan to actively manage related delinquency rates in the future.

On the 4th, the Financial Services Commission held the '2nd Real Estate PF Site Normalization Promotion Meeting' chaired by Standing Commissioner Kwon Dae-young. Representatives from the FSC, Financial Supervisory Service, policy financial institutions, and financial sector associations attended the meeting to review the progress of the financial sector's efforts to normalize real estate PF sites and to hear industry opinions on recent market conditions.

According to the authorities, as of the end of last month, a total of 91 sites were subject to the PF lender group agreement, of which 66 sites had their lender groups decide on financial support measures such as reinstatement of maturity benefits, new funding support, and interest deferral through voluntary councils. By stage, there were 73 sites in the bridge loan stage and 18 in the main PF stage. By agreement type, 54 sites had sector-specific agreements, and 37 had financial sector agreements. Among sector-specific agreements, savings banks accounted for the largest number with 46 sites, while mutual finance and Saemaeul Geumgo each had 4 sites.

[Image source=Yonhap News]

The meeting also included sharing of the real estate PF market situation. Attendees noted that as of the end of March, the delinquency rate on real estate PF loans was 2.01%, up 0.82 percentage points from 1.19% at the end of the previous year. However, the absolute figure is significantly lower than during the savings bank crisis (13.62% at the end of 2012), and the increase in delinquency rate is expected to slow down.

In particular, for securities companies, which were pointed out as having high delinquency rates, the delinquent balance was only about 1.1% of their equity capital (KRW 76.2 trillion), indicating a manageable level. Saemaeul Geumgo also showed an increasing delinquency rate, but considering profitability and soundness indicators, it is sufficiently manageable. It was emphasized that PF and joint loans can be recovered due to high repayment priority and loan-to-value (LTV) ratios.

The financial sector stated, "Through lender group operation agreements across all financial sectors, self-lender group agreements, and active sales and write-offs of delinquent loans, the increase in delinquency rates is expected to slow down," adding, "We will continue to actively manage delinquency rates in close cooperation with financial authorities."

The authorities expect that the normalization fund for PF sites, which will be launched in September, will accelerate the normalization of insolvent and potentially insolvent sites. In this regard, the Korea Housing Finance Corporation plans to continue supporting private sector autonomous normalization efforts by providing preferential business guarantees to sites pursuing business normalization.

Meanwhile, prior to the meeting, the Korea Asset Management Corporation (KAMCO) held a 'Real Estate PF Normalization Fund Business Agreement Ceremony' with five entrusted asset managers (KB, Shinhan, Aegis, Koramco, Capstone Asset Management). Under this agreement, KAMCO will act as an anchor investor to establish a 'PF Site Normalization Support Platform' to identify normalization target sites and proceed with PF bond acquisition and transfer procedures. The five asset managers will also promptly raise funds of over KRW 200 billion each, including KAMCO's investment of KRW 100 billion, and begin full-scale support from September.

Commissioner Kwon said, "We expect this fund to be a catalyst for the private sector's PF business normalization," adding, "We hope financial groups, including financial holding companies, actively participate as this can be an opportunity to discover new business possibilities."

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