Sh Marine & Fisheries Bank (Suhyup Bank) announced on the 31st that it will expand real estate finance and REITs (Real Estate Investment Trusts) investment, even as fallout from project financing (PF) distress continues to ripple through the financial sector.
Suhyup Bank and Koramco Asset Trust signed a memorandum of understanding (MOU) to strengthen their business partnership at Koramco Asset Trust's headquarters in Gangnam-gu, Seoul, the previous day.
Under the agreement, the two institutions will cooperate in the following areas: △joint discovery of REITs and real estate investment projects, △REITs asset custody and financial services, △financial support for development and investment projects pursued by Koramco Asset Trust, and △exchange of information related to real estate finance and investment.
Koramco Asset Trust is a real estate financial firm that operates REITs, real estate funds, and real estate trust businesses together with its subsidiary Koramco Asset Management. Suhyup Bank said it will actively cooperate by providing financial support, subject to internal review procedures, when needed for real estate investment and development projects pursued by Koramco Asset Trust.
Concerns are also emerging that the agreement could further increase Suhyup Bank's real estate finance exposure. The bank already has a significant portion of its corporate loans concentrated in real estate-related sectors. As of the end of last year, loans to the real estate leasing sector accounted for 36.7%, and when combined with the construction sector, the figure reached 44.3%, nearly half of all corporate loans. The bank's corporate loan delinquency rate stood at 0.62%, exceeding the average of 0.37% among the four major commercial banks (KB Kookmin, Shinhan, Hana, and Woori). Meanwhile, loans to the agriculture, forestry, and fisheries sector accounted for only 4.9%, prompting criticism that the bank leans more toward real estate finance than its original mandate of supporting the marine and fisheries industry.
Suhyup Bank CEO Shin Hak-ki, who attended the signing ceremony, said, "Through our partnership with Koramco Asset Trust, we expect to drive the development of the real estate finance market and create new investment opportunities." He added, "We will continue to provide differentiated real estate financial services based on close cooperation between the two institutions."
