More than nine out of every 10 troubled project finance sites bought by South Korea's savings bank cleanup funds remain unsold, with the funds holding them for years, according to data reviewed by lawmakers. Industry watchers question whether savings banks are simply buying time after transferring bad loans to the funds to bring down their delinquency ratios.
Of the 299 sites purchased by the first through sixth project finance (PF) cleanup funds set up by the savings bank industry, only 21, or 7.1%, had been sold or otherwise disposed of as of the end of September, according to the office of Rep. Park Sung-hoon of the People Power Party, a member of the National Assembly's National Policy Committee, on the 16th. The remaining 278 sites, or 92.9%, have yet to be disposed of.
Broken down by fund, four of the five sites bought by the first fund, created in 2023, are still being held. The second fund retains 51 of 62 sites, and the third fund 18 of 19. The fourth fund holds 100 of 107 sites and the fifth 69 of 70. None of the 36 sites bought by the sixth fund have been disposed of.
The six funds total 2.3131 trillion won ($1.6 billion), and the principal balance of the PF loans they acquired stood at 2.993 trillion won at the time of purchase. "In numerical terms, the savings bank industry is showing a clear decline in volume and improvement in asset quality, but we need to be wary of the optical illusion created by sales to the PF cleanup funds," said Ahn Soo-jin, a senior research fellow at NICE Investors Service.