SEOUL: South Korea’s financial authorities announced plans to minimize risks stemming from short-term real estate project financing (PF) loans Monday that include additional funds for strong, survivable projects but a speedy way out for those failing.
The authorities also set up new evaluation standards to more swiftly determine which projects will likely succeed and which should be liquidated.
“Despite past efforts, there have been cases where loans to failing projects are generously rolled over while interest rates and inflation are expected to remain high for an extended period of time, delaying the restructuring and liquidation of businesses and leading to a rise in the delinquency rate of financial institutions,” the Financial Services Commission (FSC) said in a joint press release with the Financial Supervisory Service.
“Hence, the financial authorities have been continuously developing additional steps to ensure the soft landing of real estate PF loans … while pushing to revise PF loan evaluation standards to enable an “orderly soft landing of PF loans,” it added.
