[Alpha Biz=(Chicago) Reporter Kim Jisun] The Ministry of Investment and Finance of BNK Kyongnam Bank, which caused the embezzlement of 50 billion won, has been found to have neglected to manage the soundness of real estate project financing (PF) loans.

According to financial authorities on the 21st, the Ministry of Investment and Finance of Kyongnam Bank classified PF loan asset soundness, which has not been repaid for a long time until 2021, as 'normal'. Although the construction company changed its business plan, the completion of the project was delayed, and the maturity was extended several times, it evaluated the PF site's business feasibility as "good" for each extension. Kyongnam Bank's Investment and Finance Ministry has been in charge of PF loans for 15 years since 2007 and has been working for an employee who embezzled 56.2 billion won in loans.

The soundness of bank loans is divided into 'normal-interest-fixed-recovery statement-estimated loss' depending on whether they are overdue or not. Normally, normal to critical (or fixed) loans are managed by sales organizations such as the Ministry of Investment and Finance. The department of Kyongnam Bank extended the maturity of loans a total of seven times after PF loans newly handled in April and August 2014, respectively, were not repaid on time. In fact, loans that had to be managed in a critical manner were managed normally.

This fact was identified in a regular inspection conducted by the Financial Supervisory Service in November 2021. The Financial Supervisory Service disposed of 'management caution' in April this year to strengthen the classification of soundness. The loan has since been reported to have been repaid normally.

The internal atmosphere of Kyongnam Bank also contributed to the negligence of loan soundness management by the Ministry of Investment and Finance. Kyongnam Bank evaluated the performance of IB headquarters dealing with PF loans mainly on profitability.

On top of that, the risk management department also failed to play its role. By 2020, the department divided the PF limit plan into high-risk (credit loan) and low-risk (guarantee loan), but created an aggressive business atmosphere by reducing the low-risk limit and increasing the high-risk limit in the same year. In 2021, this limit was integrated and the upper limit of total risk exposure (exposure) was eliminated.

If high-risk assets such as PF loans increase, the burden of capital expansion will increase.

 

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