Financial authorities will conduct a business feasibility evaluation next month for real estate project financing (PF) loans that are either overdue or have had their maturity extended three or more times.
On the 27th, the Financial Supervisory Service (FSS) held a 'Real Estate PF Business Feasibility Evaluation Briefing' at its headquarters in Yeouido, Seoul, for about 100 real estate PF evaluation officers from the financial sector, announcing this plan.
During the briefing, the FSS explained the background for improving the real estate PF business feasibility evaluation criteria on the 14th. The existing criteria did not sufficiently reflect the characteristics of PF and were not specific enough, limiting the ability to select and orderly manage projects with poor feasibility. The FSS expects that the improvement of the evaluation criteria will enhance the objectivity and rationality of business feasibility assessments.
The financial sector plans to prioritize evaluations next month for projects that are overdue, including those with deferred overdue status as of the end of this month, or those with three or more maturity extensions.
The FSS intends to further subdivide PF project evaluation types according to the stages of project progress, select key indicators, and utilize various external information such as detailed statistics by PF project location and facility type, as well as sales rate analysis by elapsed period.
Additionally, considering recent market conditions and industry opinions, if the initial loan maturity is less than 12 months, it will be regarded as 12 months at the initial loan maturity point, and the criteria for counting the number of maturity extensions will be supplemented through feedback and other means.
An FSS official stated, "Although the application of the improved evaluation criteria may impose burdens on the financial sector, such as additional reserve accumulation and profitability deterioration, delaying the cleanup of PF non-performing loans could pose greater risks. This is the golden time for a smooth landing of the PF market through careful selection, so we ask for strict evaluations based on principles."
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