2024-05-14 04:14:29
[부동산 PF 정상화 방안]
The more poor judgments, the greater the financial loss.
It is difficult to expect voluntary PF restructuring
Local construction companies – concerns about being hit by secondary financial institutions
Reactions from the market and experts to the plan to normalize real estate project financing (PF) announced by the government on the 13th are mixed. Although there is generally positive support for the principle that insolvent businesses should be liquidated as soon as possible, there are concerns that if restructuring begins in earnest, there may be a short-term shock, especially to local small and medium-sized construction companies. In addition, many analyzes say that the response of the financial sector is key to policy effectiveness.
According to the plan announced on this day, financial companies must independently evaluate the rating of PF businesses according to established evaluation standards, take measures such as extending loan maturity or exit, and receive an inspection of follow-up management from the Financial Supervisory Service. However, there is an analysis that it is difficult to expect voluntary restructuring in the financial sector because the more insolvent judgments about business sites, the greater the losses in the financial industry. An official from the financial sector predicted, “There is not much reason for financial companies to voluntarily increase the ‘fear of insolvency’ rating,” and added, “If the burden of provisions is not large, there is no reason to initiate restructuring by handing over insolvent businesses to auctions or public auctions.” This means that financial companies may begin to ‘hold on’ in anticipation of an interest rate cut expected in the second half of this year and a rebound in the real estate market.
If restructuring of insolvent PF businesses takes place in earnest, losses are expected to be inevitable in the financial industry. In particular, the risk of insolvency in secondary financial institutions with a high proportion of high-risk real estate PF may increase. As a result of Nice Credit Rating analysis, the expected real estate PF losses of secondary financial institutions such as savings banks, capital, and securities were found to be up to 13.8 trillion won. However, the authorities are of the position that the burden of additional provisioning on the financial sector will not be significant. Park Sang-won, Deputy Director of the Financial Supervisory Service, said, “We have strengthened provisioning for secondary financial institutions since the end of last year, so the amount of additional reserves will be minimal.”
The construction industry, especially small and medium-sized local construction companies, is also expected to take a hit. There is an analysis that unlike the metropolitan area, which has less liquidity than large construction companies and where land prices in major locations have risen significantly, local areas may have fewer assets that can be recovered compared to the investment amount. Kim Jeong-ju, a researcher at the Construction Industry Research Institute of Korea, said, “If the real estate market does not recover, I believe that many businesses will have to be treated as insolvent. There is a need to provide policy support for the demand to purchase insolvent businesses.”
Even if insolvent businesses are transferred to auction or public auction, it is unclear whether trading will be active. An official in the construction industry said, “The market is so depressed that even if insolvent business sites (land) are put up for sale through auctions or public auctions, they will not be absorbed quickly until the prices fall significantly.”
Reporter Kim Soo-yeon [email protected]
Reporter Kim Hyeong-min [email protected]
Reporter Jeong Soon-gu [email protected]
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2024-05-14 04:14:29