South Korea's bad bank plans to purchase 1.2 trillion won (US$1.1 billion) worth of sour property loans from local lenders in the first half of this year, a local asset management firm said Sunday.
United Asset Management Company (UAMCO), which controls the country's bad bank and is the largest buyer of debts from local lenders in the country, said it recently completed negotiations with commercial banks to buy up non-performing project financing (PF) loans.
Such a move, it said, can help these lenders remove liabilities from their books, which could improve their financial business operations.
UAMCO, created in October 2009, said the bad bank initially wanted to purchase 1.9 trillion won of sour loans but settled for a smaller takeover due to differences in price.
It said that of the seven banks that invested in the bad bank, only the Korea Development Bank (KDB) did not offload its PF loans, although it may opt to do so in the third quarter. Other investors are the National Agricultural Cooperative Federation, Shinhan, Woori, Hana, Kookmin and the Industrial Bank of Korea.
"The total to be bought marks a good start since the bad bank had originally wanted to purchase more than 2 trillion won worth of sour loans for the whole of this year," a UAMCO official said.
He said formal contracts will be signed between the lenders and the bad bank on Wednesday so the purchase can take place.