Selection of disposal targets in proportion to the PF fund investment rate
Savings banks recognize profits from disposal and delay provisions
FSC, instructing recognition of impairment losses and book adjustment
Asset management companies to face strict measures, ‘[Edaily Song Ju-o Reporter] Financial authorities discovered cases where savings banks unfairly over-recognized net profits by selling real estate project financing (PF) receivables to related parties at inflated amounts through the creation of OEM funds between savings banks and asset management companies. The funds formed for real estate PF landing were exploited by savings banks for unfair sales. Financial authorities have announced plans for additional inspections.’,
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, ‘The Financial Supervisory Service (FSC) revealed on the 9th that it identified OEM fund creation and unfair sales between A savings bank and B asset management. According to FSC, they operated in an organized manner. A savings bank invested 90.9% and 49.5% of the setting amounts for the first and second funds of B asset management respectively, totaling 908 billion won and 585 billion won. Subsidiaries included, A savings bank recognized profits of 64 billion won (151 billion won including subsidiaries) and 65 billion won (79 billion won including subsidiaries) in the first and second funds, respectively.’,
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, ‘FSC pointed out that excluding priority external investors, they matched the fund investment ratios of the savings banks to the rate of PF receivables sale accurately. In reality, when excluding external investors, the investment ratios of the first and second funds by A savings bank were 46.7% and 33.3%, respectively, aligning with the rates of disposal of impaired receivables at 46.7% and 33.3%.’,
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, ‘FSC criticized that by selling PF receivables at the proportion matching the fund investment ratio, A savings bank essentially held PF receivables as fund securities, resulting in unduly excessive recognition of net profits such as reversal of provisions totaling 129 billion won, and was evaluated as having good soundness such as a decrease from 16.2% to 13.6% in delinquency rate at the end of June.’,
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, ‘B asset management facilitated A savings bank’s impairment provisions by confirming PF receivables targeted for investment through individual reviews and by using the appraisal amounts at the time of loan origination (up to 4 years prior) without a separate due diligence process, resulting in the fund purchasing PF receivables at a high price.’,
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, ‘Regarding the unconventional recognition of profits by A savings bank, FSC plans to instruct to recognize impairment losses on securities (revenue securities), adjust the disposal assets in the savings bank’s books, and remove the blind effects on delinquency rates and overdue loan ratios caused by improper sales. For B asset management, strict measures in accordance with relevant laws and procedures are planned.’,
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, ‘Additionally, FSC will continue to monitor the market to prevent financial companies from postponing the cleanup of impaired debts using OEM funds, conduct additional inspections if necessary, proactively respond to normalize PF, and strictly deal with savings banks’ fraudulent soundness improvement actions.’,
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