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(Bloomberg) — South Korea’s five largest financial companies face losses of about 1 trillion won ($749 million) from overseas real estate investments of 20 trillion won, according to an opposition lawmaker. This reflects growing concerns about declining exposure to the sector. Ratings around the world.
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Hana Financial Group has the largest exposure, having invested more than 6.2 trillion won overseas, according to data from Yang Kyung-sook of the Democratic Party. Yang’s data was first reported by local media, including Yonhap News, and is based on information provided by the two companies in mid-January.
KB Financial Group invested 5.7 trillion won, and Shinhan Financial Group invested 4 trillion won. Woori Financial Group and Nonghyup Financial Group were in the top five in terms of overseas real estate holdings.
South Korean credit investors are keeping an eye on signs of trouble after a branch of South Korea’s largest credit union closed last year after losses on real estate-related loans. The downturn in U.S. commercial real estate could spell trouble for South Korea, as Tokyo-based Aozora Bank has racked up large amounts of bad loans despite assuring investors that it is well prepared. It was brought home earlier this year when it surprised the market by accumulating reserves.
According to reports in the Korea Herald and other Korean media, the initial investment amount of the five companies, disbursed through alternative investments such as beneficiary certificates and funds, was 10.44 trillion won, which is now 9.9 trillion won, reflecting a 10.5% loss. It is valued at 340 billion won.
–With the cooperation of Kang Shin Hye.
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