'Are PF Project Site Evaluation Standards Being Properly Followed?'…FSS Conducts On-Site Inspection of Meritz Securities

May 'Smooth Landing of Real Estate PF' Policy Initiative
On-site Inspections Expanded to Other Securities Firms

The Financial Supervisory Service (FSS) has launched an inspection to verify whether securities firms are properly conducting evaluations of real estate project financing (PF) sites.

According to financial authorities on the 16th, the FSS conducted an on-site inspection at the headquarters of Meritz Securities this morning regarding the evaluation of real estate PF sites.

This inspection is part of the financial authorities' "Future Policy for the Orderly Soft Landing of Real Estate PF" announced in May. At that time, the financial authorities judged that the evaluation criteria used by financial companies did not sufficiently reflect the characteristics and risks of PF, and thus strengthened the evaluation standards.

As a result, the scope of project feasibility evaluations was expanded from the existing main PF and bridge loans to include land-secured loans and debt guarantee agreements. Additionally, the evaluation criteria, which were previously centered on the main PF, were divided into main PF and bridge loans. Accordingly, the project feasibility evaluation grades were subdivided from the previous three levels (Good, Normal, Risk of Deterioration) into four levels: Good, Normal, Caution, and Risk of Default.

The FSS plans to expand on-site inspections to other securities firms besides Meritz Securities.