Value context and insight. lkm@koreatimes.co.kr
Banks on alert over heightened risk of corporate loan defaults amid Trump tariff war
U.S. President Donald Trump holds a chart as he delivers remarks on reciprocal tariffs during his "Make America Wealthy Again" event in the Rose Garden at the White House in Washington, Wednesday. AFP-Yonhap
By Lee Kyung-min
Commercial lenders are rushing to strengthen their monitoring of at-risk corporate borrowers exposed to greater delinquency probabilities due to the Trump tariff policies, industry officials said Sunday.
Under tighter monitoring are local exporters with significant exposure to the world's largest consumer market but without production capacities there. Sudden tariff shocks translating to a plunge in export volumes could lead to defaults on loans extended by lenders.
Also of concern are apparel makers with manufacturing facilities in Vietnam, a country subject to a U.S. tariff rate of 46 percent.
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“We established an emergency committee and held a meeting among executives from the group and its affiliates (Friday) and have since monitored the developments closely,” a Hana Financial Group official said. “We are strengthening financial health soundness, aided by early detection of borrowers that are likely to fall delinquent.”
Rechargeable battery industries are under close monitoring, the official said, as part of an overall bank-wide risk diversification efforts.
“During this meeting, we concluded that the financial market volatility increased due to the Trump tariffs,” the official added. “We decided to strengthen monitoring of foreign exchange rate fluctuations and capital ratios relative to risk-weighted assets and liquidity ratios.”
Woori Bank also said credit monitoring was strengthened across the industries.
“Corporate borrowers with U.S. tariff fallout exposures are closely monitored. In addition, tighter credit limits will be imposed and foreign currency loans will be closely managed, as part of our conservative asset management drive,” a Woori official said.
KB Kookmin Bank is monitoring the tariff aftershocks and risks in a three-tier system.
The borrowers in the high, medium and low-risk categories will respectively be subject to new evaluations starting in June, according to the lender.
NH NongHyup Bank is closely monitoring delinquency rates and the loan amount total in sectors vulnerable to tariff risks.
Meanwhile, Hana Bank said the Donald Trump administration's 25 percent tariffs could slash Korea’s U.S. exports by 13 percent, translating to over 10.6 trillion won in loss of value-added output.
A research institute under the state-owned lender Industrial Bank of Korea said Korea’s U.S. exports would drop by 12.8 percent and exports total would dip 4.6 percent under Trump’s 25 percent tariffs.