Financial Supervisory Service Identifies Some Irregularities in 26.5 Trillion Won Solar Power Loans and Funds Review

[Asia Economy Reporter Song Hwajeong] The Financial Supervisory Service (FSS) has identified some defaults in solar power-related loans and private equity funds amounting to 26.5 trillion KRW. Accordingly, further investigations are expected to follow.

According to financial circles on the 5th, the FSS recently conducted a review of the status of solar power loans and private equity funds across all financial sectors and confirmed some defaults, currently discussing follow-up measures.

Previously, amid issues of illegality and defaults in the solar power generation promotion projects during the Moon Jae-in administration, the FSS began assessing the status of defaults related to solar power loans. The FSS is conducting inspections across all financial sectors and is compiling and analyzing credit extensions related to solar power loans and private equity funds. For solar power loans, the exposure scale was identified by separating policy fund loans and financial institutions’ own loans. A financial authority official stated, "The submitted data shows some defaults in solar power loans, but the scale is not large, so a detailed review is necessary," adding, "We need to look at which regions and which assets are mainly delinquent, especially for loans made by financial institutions themselves."

According to data submitted by the FSS to the office of Yoon Chang-hyun of the People Power Party, credit extensions related to solar power loans total 26.5 trillion KRW, including 12.1 trillion KRW from government funds, 5.7 trillion KRW from financial public institutions, 5.6 trillion KRW from banks, and 3.1 trillion KRW from funds.

The total scale of solar power loans and funds across the financial sector overlaps in some areas by region, but solar power loans from banks amount to 5.6088 trillion KRW. Among these, the number of loans exceeding the collateral value was 12,498 cases, totaling 1.4953 trillion KRW.

The top 10 domestic asset management companies hold 50 solar power private equity funds, with a total set amount of 3.1387 trillion KRW. Among them, Aegis Real Asset, a subsidiary of Aegis Asset Management, is facing a potential loss of 50 billion KRW.

Funds from financial public institutions amounted to 5.7 trillion KRW. KDB Industrial Bank provided loans of 391.4 billion KRW, Small and Medium Business Bank loans totaled 66.2 billion KRW, and KDB Infrastructure Asset Management set up funds worth 3.468 trillion KRW with investments of 2.3479 trillion KRW. Korea Growth Finance set up funds worth 1.7598 trillion KRW with investments of 190.1 billion KRW, and the Korea Credit Guarantee Fund provided loans totaling 1.5512 trillion KRW.