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The government has decided to inject W1.3 trillion to help savings banks cope with bad project finance loans, using the Korea Asset Management Corporation's fund of W650 billion (US$1=W1,467). The Financial Services Commission on Wednesday said it will take over 164 PF loan arrangements worth W1.3 trillion-worth that have turned bad this month.
The total amount of savings banks' 899 PF loans reaches W12.2 trillion. In an inspection of savings banks in September and October, the Financial Supervisory Service found that W1.5 trillion, or 12 percent, of the PF loans had turned bad. Of the W1.5 trillion of bad PF loans, the FSC is set to take over W1.3 trillion, with the exception of W200 billion worth of loans that had been spent during the early stage of business projects.
To improve the soundness of savings banks, the FSC pledged to ask savings banks to cut dividends for shareholders until the BIS capital adequacy ratio reaches 8 percent. In short, the FSC is determined to hold some savings banks accountable for reckless lending when the real estate market was booming.
(englishnews@chosun.com )
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