The state-run debt clearer has only recouped 7 percent of soured debts from project financing loans, largely due to the massive bankruptcies of local savings banks amid the protracted slump in the property market, data showed Thursday.
The Korea Deposit Insurance Corp. retrieved 298.9 billion won ($277.7 million), or 6.9 percent of 4.32 trillion won worth of bad loans it bought between 2007 and July this year from infrastructure and industrial projects that defaulted, according to KDIC documents submitted to parliament.
The bulk of soured loans were extended by local savings banks for building apartments, high-end villas, golf clubs or resort hotels, the document said.
The KDIC cited the spate of bankruptcies and business suspensions among local savings banks as the primary reason for the low bad loan recovery rate.
Since 2011, a total of 23 savings banks in Korea have gone under on massive defaults from project financing loans. Many of the executives were indicted on negligence and corruption charges, and a lot of those project financing loans turned out to be extended without thorough assessments. (Yonhap News)
