Overseas Real Estate Shock Is Not Someone Else's Problem... Exposure of 5 Major Financial Groups Alone Reaches 20 Trillion Won

Major domestic financial groups are facing concerns that it will be difficult to avoid massive losses due to the downturn in the U.S. commercial real estate (CRE) market.

According to data on overseas real estate status from the five major financial groups (KB, Shinhan, Hana, Woori, NH Nonghyup) on the 18th, the total exposure (risk exposure amount), including investments in overseas real estate-related funds, securities, and loans, was estimated at approximately KRW 20.4 trillion.

Among these, real estate related to the North American region (U.S. and Canada) accounted for about KRW 11.4 trillion, exceeding half the proportion (55.9%). By industry sector, the exposure was highest in banks affiliated with the five major financial groups (KRW 7.5333 trillion), followed by securities companies (KRW 3.5839 trillion), life insurance companies (KRW 2.7674 trillion), and non-life insurance companies (KRW 1.687 trillion).

In recent years, as the overseas real estate market, including the U.S., has generally declined, especially in commercial real estate with high vacancy rates, the soundness of related loans and investment assets of the five major groups has rapidly deteriorated. According to some financial groups’ due diligence results, the proportion of risky assets classified as watchlist or below fixed level has already exceeded 15%.

As the scale of non-performing overseas real estate-related assets gradually increases, each financial group has been actively reflecting these losses in their books since last year. The overseas real estate-related losses accounted for in the performance of the five major financial groups amount to KRW 1.055 trillion (losses of KRW 955 billion + related provisions of KRW 100 billion).

Currently, the outstanding balance of overseas real estate funds (private and public) sold by the five major financial groups totals KRW 1.0163 trillion, of which KRW 406.6 billion (KRW 198 billion in the first half and KRW 208.6 billion in the second half) will mature this year. Confirmed losses from overseas real estate funds maturing last year and this year have so far amounted to about KRW 5.7 billion.

The five major financial groups currently assess that they can manage the related risks, but internally, they have activated emergency response systems such as on-site due diligence, monitoring, and review of additional provision accumulation.

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