Savings banks` project financing loan dips in Q4

SEOUL, Feb. 5 (Yonhap) -- South Korean savings banks' loans for real estate
project financing fell in the fourth quarter as they refrained from expanding
such loans due to rising bad debt, the financial watchdog said Thursday.
As of the end of December, local savings banks' real estate project financing
loans amounted to 11.5 trillion won (US$8.3 billion), down 8.4 percent from three
months earlier, the Financial Supervisory Service said.
"The decline comes as state-run debt clearer Korea Asset Management Corp. (KAMCO)
has bought their bad assets and savings banks were reluctant to expand such loans
amid the slowing economy," the watchdog said in a statement.
The default rate for such loans reached 13 percent as of the end of last year,
down from 16.9 percent at the end of September.
The data comes as smaller builders, which borrowed mostly from savings banks
during the housing market boom, are now struggling to service debts taken out
during the 2005-2006 housing boom.
KAMCO plans to buy 1.3 trillion won worth of bad assets from mutual savings
banks, out of which it purchased 500 billion won in late last year.
The South Korean economy is slowing more sharply than expected amid tumbling
exports and weak domestic demand.
Asia's fourth-largest economy shrank 5.6 percent last quarter from three months
earlier, the sharpest fall since the Asian financial crisis a decade ago. The
International Monetary Fund predicted Tuesday the South Korean economy will
shrink 4 percent this year.
sooyeon@yna.co.kr
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