SEOUL (Reuters) – South Korea is moving to significantly tighten the provisioning requirement on non-performing loans at major non-bank lenders in the face of a slump in the local real estate market and heightened concerns about the banking sector.
The Financial Services Commission (FSC) said on Wednesday in a statement after a meeting with officials from the five major non-bank lenders and government ministries that it has proposed raising the required provisioning ratio sharply.
It proposed as an example raising the ratio of expense that banks have to put aside for possible loan loss to 130% of the non-performing loans from the current 100%, although a decision will be made later, it added.
The five lenders are the National Agricultural Cooperative Federation, the National Credit Union Federation of Korea, the National Federation of Fisheries Cooperatives, the National Forestry Cooperative Federation and the Korean Federation of Community Credit Cooperatives.
(Reporting by Choonsik Yoo; Editing by Christian Schmollinger)
