ID :
72926
Thu, 07/30/2009 - 14:59
Auther :
Shortlink :
https://www.oananews.org//node/72926
The shortlink copeid
S. Korea to expedite cleanup of bad bank loans
SEOUL, July 30 (Yonhap) -- South Korea will urge banks to tap more of a state
restructuring fund and make self-help efforts in order to make their balance
sheets cleaner, the financial watchdog said Thursday.
Local banks have seen their distressed loans rise steadily due to a slowing
economy. As of end-June, their problem loans totaled 19.6 trillion won (US$15.8
billion), 1.5 percent of aggregate lending and up from 19.3 trillion won three
months earlier.
To help financial firms clean their balance sheets, the government plans to spend
20 trillion won this year out of a 40 trillion won fund to buy bad debts and
purchase assets from ailing companies.
"Although the growth of distressed loans has recently eased, there is still a
chance that bad debts could increase in accordance with the corporate
restructuring and the pace of an economic recovery in the second half," the
Financial Services Commission (FSC) said in a statement. "There is the need to
bolster banks' financial soundness in a preemptive way."
The watchdog said the fund has bought bad property-linked loans worth 816.4
billion won from the local banking sector and purchased 17 out of a planned 62
idle vessels from ailing local shipping lines which have to sell their assets as
part of restructuring efforts.
"The government will seek to revise related laws to allow private equity funds to
increase investments in distressed loans and advise local banks to step up their
own efforts to dispose of such debts," the FSC added.
The FSC said the government will guide local banks into lowering the bad debt
ratio to below 1 percent by the end of this year and the Financial Supervisory
Service will assess the process on a quarterly basis after banks unveil their own
targets for the amount of sour debts they will dispose of.
Six banks including top lender Kookmin Bank are pushing to create a debt-clearing
agency by pooling a combined 1.5 trillion won in September in an effort to keep
their distressed assets from being sold at a big discount. Currently, the
state-run Korea Asset Management Corp. (KAMCO) has a near monopoly on the
country's debt-clearing market.
sooyeon@yna.co.kr
(END)
restructuring fund and make self-help efforts in order to make their balance
sheets cleaner, the financial watchdog said Thursday.
Local banks have seen their distressed loans rise steadily due to a slowing
economy. As of end-June, their problem loans totaled 19.6 trillion won (US$15.8
billion), 1.5 percent of aggregate lending and up from 19.3 trillion won three
months earlier.
To help financial firms clean their balance sheets, the government plans to spend
20 trillion won this year out of a 40 trillion won fund to buy bad debts and
purchase assets from ailing companies.
"Although the growth of distressed loans has recently eased, there is still a
chance that bad debts could increase in accordance with the corporate
restructuring and the pace of an economic recovery in the second half," the
Financial Services Commission (FSC) said in a statement. "There is the need to
bolster banks' financial soundness in a preemptive way."
The watchdog said the fund has bought bad property-linked loans worth 816.4
billion won from the local banking sector and purchased 17 out of a planned 62
idle vessels from ailing local shipping lines which have to sell their assets as
part of restructuring efforts.
"The government will seek to revise related laws to allow private equity funds to
increase investments in distressed loans and advise local banks to step up their
own efforts to dispose of such debts," the FSC added.
The FSC said the government will guide local banks into lowering the bad debt
ratio to below 1 percent by the end of this year and the Financial Supervisory
Service will assess the process on a quarterly basis after banks unveil their own
targets for the amount of sour debts they will dispose of.
Six banks including top lender Kookmin Bank are pushing to create a debt-clearing
agency by pooling a combined 1.5 trillion won in September in an effort to keep
their distressed assets from being sold at a big discount. Currently, the
state-run Korea Asset Management Corp. (KAMCO) has a near monopoly on the
country's debt-clearing market.
sooyeon@yna.co.kr
(END)
