South Korea’s NPL market to exceed W1tr won in Q3

[THE INVESTOR] The volume of South Korean bank‘s non-performing loans to be publicly auctioned in the third quarter is expected to increase over 20 percent from a year earlier, while some bidders are likely to return to the market after being absent for several years.

Based on outstanding principal balance, a pool of 1.06 trillion won (US$950 million) of distressed assets owned by South Korea’s major banks is to be on sale during the July-September period, up 23 percent from 865.4 billion won in the same period last year. 

Seven lenders will carry out 10 separate public auctions in this quarter. Industrial Bank of Korea will seek to sell the largest amount of its assets worth 435.8 billion won, followed by KEB Hana Bank, which will offer NPLs worth 149 billion won.

Woori Bank, Kyongnam Bank, Kookmin Bank, NongHyup Bank and Shinhan Bank will also auction their delinquent loans worth 125.1 billion won, 111 billion won, 106.2 billion won, 71.4 billion won and 67.3 billion won, respectively.

Bank of America Merrill Lynch will make a comeback to Korea’s NPL market after a 10-year hiatus to compete with domestic investors including UAMCO, Mirae Asset Global Investments and Eugene Asset Management for loans owned by Industrial Bank of Korea.

OSB Community Bank and Fine Partners will also take part in the auctions.

By Park Han-na (hnpark@heraldcorp.com)