Saemaul Geumgo in crisis… As the delinquency rate soars, 200 billion won in non-performing loans are sold again.

Saemaul Geumgo, whose delinquency rate has been increasing this year, is pursuing a plan to sell 200 billion won worth of non-performing loans to Korea Asset Management Corporation (CAMCO). Saemaul Geumgo sold 1 trillion won worth of non-performing loans to KAMCO at the end of last year.

According to financial authorities and the financial sector on the 24th, KAMCO is considering purchasing 200 billion won worth of non-performing loans held by Saemaeul Geumgo. If Saemaul Geumgo sells non-performing loans to KAMCO, the delinquency rate will drop. An official from the financial authorities explained, “We are discussing the timing of (Camco’s) purchase, taking into account the size and method.”

It appears that the sluggish real estate market is the reason why Saemaul Geumgo’s delinquency rate is rising and Camco is taking action. Saemaul Geumgo has been handling managed land trusts and joint loans with characteristics similar to real estate project financing (PF), and it is analyzed that some insolvency occurred here.

Saemaul Geumgo’s delinquency rate soared from 5.07% at the end of last year to 6% in January and 7% in February. As of last month, the delinquency rate had not slowed down and was reported to have risen to the mid-7% range.

At the end of last year, KAMCO also acted as a ‘rescue pitcher’ by purchasing approximately 1 trillion won in non-performing loans from Saemaeul Geumgo. Saemaul Geumgo originally wanted to sell an additional 1 trillion won, but it seems that Camco lowered it to 200 billion won, considering the scale of non-performing loans purchased in other industries.

Saemaul Geumgo has also begun reorganizing its PF business on its own, but the pace is not moving due to differences of opinion on the sale price. In order to clean up insolvent PF businesses, the financial authorities will also announce a four-stage business feasibility evaluation standard next month, which is expected to be applied to Saemaul Geumgo as well.

Previously, Saemaul Geumgo’s delinquency rate rose from the low 5% at the beginning of last year to 5.41% at the end of the first half of the year. During the same period, there was controversy over the insolvency of safe deposit boxes, and a bank run (large-scale fund outflow) of over 17 trillion won occurred in July alone. Accordingly, the Ministry of the Interior and Safety announced in September last year that it plans to sell up to 2 trillion won worth of delinquent bonds to KAMCO as a way to manage the soundness of Saemaeul Geumgo.