Domestic Financial Companies Face 280 Billion KRW Loss Risk on Hong Kong Building Loan

Domestic financial institutions are facing a situation where they are unable to recover most of the 280 billion KRW loan they provided to a landmark office building in Hong Kong during the low-interest period four years ago.

According to the financial investment industry on the 16th, Mirae Asset-affiliated Multi Asset Asset Management will hold a Collective Investment Property Evaluation Committee on the 18th and plans to write off 80-100% of the fund assets raised to lend to the Hong Kong Golden Financial Global Center building.

As a result, investors such as corporations seeking an annual 5% return are inevitably facing losses of around 90%.

Previously, domestic investors including Mirae Asset Securities lent 280 billion KRW to the building in mid-June 2019 as mezzanine financing based on the exchange rate at that time.

Mirae Asset Securities raised a fund worth 250 billion KRW and sold it to domestic institutions. Securities firms such as Mirae Asset Securities, Korea Investment & Securities, and Eugene Investment & Securities invested between 20 billion and 40 billion KRW of their own funds. It is also known that the Bank of Korea Labor Union and ultra-high-net-worth individuals from Woori Bank invested.

The fund was managed by Multi Asset Asset Management.

However, as interest rates rose, a Hong Kong billionaire who provided a guarantee went bankrupt, and the building's price plummeted, senior lenders Singapore Investment Corporation (GIC) and Deutsche Bank exercised their rights to sell the building and recover the principal, leaving the remaining investors such as mezzanine lenders in a difficult position to recover their funds now.

A Mirae Asset official stated, "Our top priority is to focus all efforts on recovering the principal and interest of the mezzanine bonds held by the fund," adding, "We are doing our best to protect investors through legal procedures and will promptly provide guidance as details become concrete."

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