Korean financial regulator vows to fight contagion risks from property financing: report

Lee called these real estate PF risks a “detonator” of the South Korean economy.

South Korea’s financial authorities said that they will spare no effort to prevent risks of real estate project financing from spreading into overall financial markets, reports Yonhap, based on statements made by the head of the Financial Supervisory Service (FSS).

FSS governor Lee Bok-hyun reportedly said that the regulator will work to persuade financial firms first to address credit risks from real estate project financing (PF) loans.

Lee called these real estate PF risks a “detonator” of the South Korean economy.

He further warned financial firms that they will face stern punishments if they make wrong decisions to avoid losses or neglect their responsibilities.

Short-term loans involving real estate projects have emerged as a major risk factor to banks following the debt restructuring application of one of South Korea’s major builders, Taeyoung Engineering & Construction Co.

The original report ‘Regulator vows measures to prevent contagion from risks of property financing’ by Kim Na-young was published on Yonhap News Agency.