Savings Banks Establish 200 Billion KRW Second Fund to Normalize PF

Kamco Also Plans to Sell 200 Billion Won of Non-Performing Loans

The Korea Federation of Savings Banks announced on the 14th that the savings bank industry has decided to establish a second distressed debt cleanup fund worth 200 billion KRW to normalize real estate project financing (PF).

A total of 22 companies are participating in the fund, including top PF loan providers and savings banks affiliated with financial holding companies. Multiple fund managers will be selected.

The savings bank industry plans to increase participating savings banks and explore various sales structures to prepare third and fourth funds. Additionally, they intend to promptly clean up distressed assets through activation of auctions and voluntary write-offs to enhance soundness.

[Image source=Yonhap News]

Previously, the industry established a first fund worth 33 billion KRW in September last year and completed investments in March. They also agreed to transfer 200 billion KRW worth of distressed debt to the Korea Asset Management Corporation (KAMCO).

Oh Hwa-kyung, Chairman of the Korea Federation of Savings Banks, stated, “The savings bank industry has faced difficulties in selling distressed PF assets due to market demand, price differences, and challenges in negotiations among major creditors. This fund is significant as the industry is making voluntary efforts to ensure a soft landing for real estate PF loans, and it is expected to play a substantial role in cleaning up distressed assets of savings banks.”