2024-07-23 19:44:05
Kim Byung-hwan, the nominee for Chairman of the Financial Services Commission, agreed with the idea that real estate project financing (PF) companies should increase their capital adequacy ratios and announced plans to improve the structure by utilizing incentives, etc.
At the confirmation hearing for the Financial Services Commission candidate held by the National Assembly’s Political Affairs Committee on the 22nd, Chairman Kim responded in this way to People Power Party lawmaker Kim Sang-hoon’s claim that “the equity capital ratio of real estate development companies should be increased.”
Candidate Kim said, “PF delinquency rates are rising because high interest rates have persisted for a long time and the real estate market has been poor,” and “I completely agree with the idea that our country’s real estate PF needs to be improved because its equity capital investment rate is too low compared to foreign countries.”
He said, “We are considering various measures, including providing incentives, to increase the equity capital of the project operator,” and “We believe that the project operator structure needs to be changed.”
Candidate Kim also stated his position on the question from Democratic Party of Korea lawmaker Kim Yong-man, who claimed that “Last year, the Financial Services Commission promoted the management of insolvent PF businesses through a voluntary agreement method, which actually served to hide the insolvency.”
Candidate Kim explained, “At the time, I think they took the real estate market situation into consideration,” and “Last year, we focused on reducing the shock by extending the maturity of PF loans because we expected that high interest rates would not last long. However, recently, we judged that high interest rates would not last long, so we made the maturity extension requirements stricter again.”
Regarding the claim that “the PF business site’s maturity extension and interest deferral system is postponing bad debts,” he explained, “At the time, all creditors were trying to collect their money,” and “since the market would have collapsed if left as is, financial institutions at the time were strongly of the opinion that the maturity should be extended in the major shareholders’ agreement.”
He continued, “We have now placed a limit on the number of extensions of maturity, and are making it mandatory for a portion of the interest to be repaid in order to have a post-mortem,” adding, “We are currently evaluating the feasibility of PF projects, and based on the results, we will pursue auctions or restructuring of projects that are deemed insolvent.”
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2024-07-23 19:44:05