Reviewing Solar Power Loans from 2017 to August 2022
General Fund Loans Total 14.7 Trillion Won... Likely Larger Including Geumgong
NongHyup Leads with 4.65 Trillion Won in Mutual Finance
Among Individual Financial Firms, KB Kookmin and Jeonbuk Banks Are the Largest
[Asia Economy Reporter Song Seung-seop] It has been confirmed that the scale of funds supplied by the domestic financial sector for solar power generation projects is larger than initially reported. The Financial Supervisory Service (FSS) plans to take a closer look at the soundness situation.
According to the provisional data on the scale of solar power loans and funds handled and asset soundness status compiled by the FSS on the 7th, the total amount set from January 2017 to last August was 16.3 trillion KRW in loans and 6.4 trillion KRW in funds, totaling 22.7 trillion KRW. Based on the current balance, loans amount to 11.2 trillion KRW and funds 6.4 trillion KRW. This investigation was conducted amid growing social interest in the status of solar power-related loans and funds following the announcement of a sample survey on the operation of policy funds by the Office for Government Policy Coordination last month.
The FSS categorized solar power loans into ‘policy fund loans,’ ‘secondary interest subsidy agreement loans,’ and ‘general fund loans.’ Among these, general fund loans issued by financial companies using their own capital amounted to 14.7 trillion KRW, the largest portion. This exceeds the previously known private loan scale of 8.7 trillion KRW (5.6 trillion KRW from banks and 3.1 trillion KRW from funds). When combined with loans from government finances and financial public institutions, the scale is expected to be even larger.
By sector, mutual finance institutions handled the largest amount of solar power loans at 7.2 trillion KRW. In particular, NongHyup disbursed 4.65 trillion KRW, ranking first in the industry. Credit unions accounted for 1.79 trillion KRW, and Suhyup (the National Federation of Fisheries Cooperatives) classified 740 billion KRW as solar power loans. Banks, with 7 trillion KRW in loans executed, ranked second, followed by insurance companies (1.9 trillion KRW), specialized credit finance companies (130 billion KRW), and savings banks (70 billion KRW).
Regarding funds, 31 asset management companies created a total of 111 private equity funds, forming 6.4 trillion KRW in capital.
FSS: "We will assess asset soundness and take necessary supervisory measures"
Based on the balance, general funds were also the largest at 9.7 trillion KRW. By lending institution, mutual savings banks accounted for 5.7 trillion KRW, banks 4.2 trillion KRW, and insurance companies 1.2 trillion KRW. Fund investors were predominantly financial institutions (6.3 trillion KRW) and general corporations (70 billion KRW), making up 99.9%, while individual investors accounted for only 8.1 billion KRW or 0.1%.
Among individual financial companies, KB Kookmin Bank handled the largest scale and number of loans over five years, with 1.8747 trillion KRW (8,242 cases). Jeonbuk Bank followed with 1.3686 trillion KRW (6,575 cases). Based on balance, Jeonbuk Bank had the largest amount at 1.0048 trillion KRW, followed by KB Kookmin Bank with 859.3 billion KRW.
The FSS confirmed that the current delinquency rate and non-performing loan ratio are not high. As of the end of August, the average delinquency rate was 0.12%, with savings banks at 0.39%, specialized credit finance companies at 0.24%, and mutual finance institutions at 0.16%. However, since loan maturities are long-term (policy funds typically have a 5-year grace period followed by 10 years of installment repayment) and grace periods are often granted, the FSS plans to continue monitoring the exact soundness situation. Funds also often have maturities set around 15 to 25 years, so continuous monitoring is necessary to assess asset deterioration. Currently, among solar power funds whose maturities have arrived, two private equity funds (with a total set amount of 5 billion KRW) have suspended redemptions.
In the fund industry, KDB Infrastructure holds the largest loan balance among public offering managers with 1.1952 trillion KRW, while Hangang Asset holds the largest among private managers with 474.2 billion KRW.
The FSS stated, “We will conduct a more detailed inspection of the risks and asset soundness status of solar power loans and funds and take necessary supervisory measures based on the inspection results. If there is a request for cooperation from related agencies regarding solar power loans and funds, we will cooperate within the legally permissible scope.”
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
