Over half of risky PF loans to be restructured by June: watchdog

This undated photo show FSS building in Seoul. Korea Times file

Over half of loans extended to risky real estate development projects are expected to be restructured by the end of June via sell-offs or recapitalization, the financial watchdog said Thursday.

According to the Financial Supervisory Service (FSS), some 38 percent, or 9.1 trillion won, of 23.9 trillion won ($17.4 billion) extended in loans to risky real estate project financing (PF) had been restructured as of end-March.

The watchdog said an additional 3.5 trillion won worth of real estate PF loans will be recapitalized or written off by the end of next month, which means some 52.7 percent of soured PF loans will be restructured by that time.

Financial institutions' exposure to real estate development stood at 202.3 trillion won at the end of last year, down 28.8 trillion won, or 12.5 percent, from a year ago.

From three months earlier, the tally marks an 8.1 trillion-won, or 3.8 percent, decline, according to the watchdog.

PF loans have been one of the sticky issues in the financial market as a rise in soured loans, which started in late 2023, was feared to hurt financial institutions and the financial stability in the overall market.