Earlier, the financial authorities are supporting the Corona 19 loan program for SMEs and small business owners in response to the spread of Corona 19 last year. The program is being maintained by extending the program by six months twice in September of last year and in March of this year by supporting the deferral of the principal and interest repayment of low-interest loans. As of the end of December last year, the amount of COVID-19 loans by all banks reached 251 trillion won. Of these, the total amount of loan extension and interest held by the five major commercial banks alone exceeded 108 trillion won as of the 22nd of this month.
Initially, the financial authorities had focused on terminating the Corona loan support program at the end of September. This is because, at the beginning of this year, the need for financial support has diminished as signs of economic recovery became clear due to the expansion of vaccine distribution. However, with the unexpected arrival of the fourth COVID-19 pandemic, the voices of re-extension of the Corona 19 loan program are growing. In fact, it is known that Financial Services Commission Chairman Eun Seong-soo said at an internal meeting last week with the intention that it is not easy to comment on whether the Corona 19 loan will be terminated right now.
Meanwhile, banks agreed that measures should be taken against companies that defer interest even if they re-extend their Corona loan programs for SMEs and small businesses. It is pointed out that continuing to provide support to marginal companies that have been hit hard by the corona virus, even if it is difficult to pay even interest, can be a ‘pour water on the bottom of the poison’. In particular, the industry is very concerned as the burden of bad corporate loans could be passed on to the banking sector in the future.
An official from the banking sector explained, “The fact that it is difficult to repay even the interest, second only to the principal, means that there is a high possibility that even the principal cannot be repaid.
Could the bank loan principal and interest repayment deferral program be extended again for SMEs and small business owners who are suffering from the impact of COVID-19?
– The scale of ‘Corona Loans’ from the 5 largest commercial banks has reached 108.25 trillion won
– Two extensions in September of last year and in March of this year. Possibility of re-extension↑
– Corona 4 pandemic..The Financial Services Commission “carefully review extension” turning
– Financial sector’s ‘highest’ performance ever… Voices of “sharing pain”
It is understandable in terms of supporting SMEs and small business owners, but isn’t there a big concern about side effects such as expanding insolvency?
– Small businesses borrowed 67 trillion won from banks after Corona
– Growing fears of transfer to households with bad loans
As financial holding companies are recording the best performance, it seems that social demands for pain sharing cannot be ignored.. What is the bank’s position on the additional extension?
– Banks with good performance… It seems difficult to turn away
– “Excluding corporate and personal support that can’t even pay interest”
– Pointed out ‘pouring the bottomless poison’ in supporting marginal companies
These days, financial holding companies are in a good mood due to their earnings and interim dividends.. Would this not be a burden on the stock price?
– Bank stocks strengthened their performance and risk management… “It’s not a big burden”
– Investor sentiment is sluggish due to weakening expectations for a rate hike
– Possibility of worsening investment sentiment in major bank stocks after bank listing