To Minimize Likelihood of Contingent Liabilities Being Realized
The financial authorities told 20 securities companies to look into their overseas real estate investments with the COVID-19 pandemic predicted to result in rapid declines in the prices of some overseas real estate assets. The Financial Supervisory Service is likely to examine the details late this month.
The securities companies complained about the measure. “Although we are well aware that the measure is to minimize the probability of contingent liabilities being realized, the data is not subject to external disclosure,” one of them said, adding, “Regular inspections based on relevant rules are nothing to complain about, but it seems that the measure is an excessive intervention based on the Financial Supervisory Service’s arbitrary determination.”
It is also said that the authorities’ move is to add regulations in the long term. The Financial Supervisory Service remarked that the measure is to check some details on the assets that have been handled by those companies, an official announcement on the measure will be made later and nothing has been determined as to whether it will become regulations.
According to the Financial Supervisory Service, securities companies’ overseas real estate exposure totaled 11.1 trillion won at the end of September 2019, including 6.7 trillion won in real estate fund investment, 2.9 trillion won in debt guarantee and 1.3 trillion won in loans.