Concerns grow over Japan savings banks' loans

The Korea Times

The Korea Times

Finance

Sat, September 30, 2023 | 12:31

Economy

Concerns grow over Japan savings banks' loans

Posted : 2019-07-29 19:17

Updated : 2019-07-29 19:58

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By Jhoo Dong-chan

Japanese capital is dominating Korea's secondary lending market since Japanese subprime loans and savings bank loans granted to Korean customers exceeded 17 trillion won ($14.3 billion).

Japanese subprime loan and savings banks have now secured nearly a 25 percent market share in Korea's secondary loan business. This raises concerns over possible financial difficulties among Korea's low-income bracket looking for a quick loan if Tokyo expands its economic retaliation into the financial sector.

According to a study released by the Financial Supervisory Service (FSS), Japanese private lenders and savings banks granted Korean customers a total of 17.41 trillion won loan as of the end of December. It accounted for about 22.7 percent of the nation's total subprime loan market of 76.54 trillion won.

Japanese capital's dominance in the market is in a stark contrast to other financial sectors here where they have yet to demonstrate a strong presence.

Japanese commercial banks have granted Korean customers a total of 24.7 trillion won in loans as of the end of May, accounting for only 1.2 percent of Korea's total commercial bank loan market worth 1,983 trillion won.

Japanese investors also invested 13 trillion won in the nation's stock market as of the end of June, accounting for about 2.3 percent of foreigners' total investments. They also occupied only 1.3 percent of foreigners' total investments in the nation's bond market with 1.6 trillion won.

This indicates Korea won't experience much difficulties even if Tokyo wages an economic retaliation in the financial sector against Seoul.

However, this could impose a serious burden to the nation's low-income bracket since Japanese subprime loan and savings banks account for nearly 25 percent in Korea's secondary lending market.

Japanese savings banks granted 10.73 trillion won in loans here as of the end of December, accounting for about 18.1 percent of the total of the nation's savings banks loans worth 59.18 trillion won. Japanese SBI is the nation's largest savings banks granting a total of 6.45 trillion won in loans here.

Japanese private subprime lenders also granted Korean customers a total of 17.34 trillion won in loans as of the end of December. The figure accounted for 38.5 percent of the nation's total subprime loan market.

"If Japanese capital downsizes their lending businesses here, the nation's low-income bracket could experience difficulties in securing a loan," an FSS official said.

"We cannot say at this point whether Tokyo will decides to expand its economic retaliation into the financial sector, but need to monitor how it develops."

jhoo@koreatimes.co.kr