Distributed the ‘5th Guidelines’ of the Central Association
Additional Restrictions on Credit Ratings for Corporate Borrowers
Recently, amid concerns about the soundness of real estate project financing (PF) loans surrounding Saemaul Geumgo, Saemaul Geumgo has started to evolve itself by presenting stronger loan guidelines than before.
According to the related industry on the 12th, the Saemaul Geumgo Federation recently distributed ‘the 5th guidelines for joint/group loans and managed land trust business expense loans’ to all safes. It has been five months since the first to fourth guidelines were issued from July to November of last year.
The 5th guidelines have strengthened the standards that allow limited handling if certain criteria are met while maintaining the existing stance of ‘in principle, limiting the handling of joint/group loans and managed land trust business expense loans’. .
For example, in joint loans, the credit rating of corporate borrowers was additionally restricted to match the level with other mutual financial institutions. In addition, the requirements for loans related to local housing associations have been strengthened. Loan is possible only when the local housing association, which has been authorized by the head of the competent local government pursuant to Article 11, Paragraph 1 of the Housing Act, has secured ownership of 95% or more of the necessary business site for business plan approval.
Some of the contents of the 4th guideline were also reflected in the loan business method. A typical example is that safes whose delinquency rates at the end of the previous month exceeded twice the national average cannot be newly treated for joint loans. In relation to management land trust business expense loans, follow-up management was strengthened. Saemaul Geumgo treats management land trust project cost loans as collateral recognition ratio (LTV) of 60% or less on the premise of priority (priority repayment), and the delinquency rate is 0.71% as of the end of January this year.
In addition, as of the end of February this year, Saemaul Geumgo is managing a redemption reserve of approximately KRW 13.1105 trillion to respond to customers’ demand for payment of deposits and installment savings. In addition, according to the Saemaul Geumgo Act, deposit protection of up to 50 million won per person is provided in the same way as other financial institutions. As of the end of February this year, Saemaul Geumgo’s average liquidity ratio was 112.8%.
The financial authorities also dismissed the possibility of insolvency of Saemaul Geumgo. At the end of last month, Financial Services Commission Chairman Kim Joo-hyun answered a question about the bankruptcy of Saemaul Geumgo, saying, “There is no situation to worry about.” Regarding the delinquency rate of real estate PF loans, Bank of Korea Governor Lee Chang-yong also said, “It is lower than in the past and is not at a high level even compared internationally.” Evaluated.