Gov't to launch PF, construction finance support centers in September

The government will launch dedicated financial support centers next month to ease financing difficulties in the housing supply sector — with the Financial Supervisory Service handling project financing sites and Korea Development Bank overseeing construction companies — as a follow-up to the Aug. 13 real estate finance package.

The Financial Services Commission and the Ministry of Land, Infrastructure and Transport held the first session of a regular finance-construction industry consultative meeting Friday, attended by the five major banks, leading securities firms, the FSS, Korea Development Bank, Korea Asset Management Corporation (Kamco), Korea Housing Finance Corporation, Korea Housing and Urban Guarantee Corporation (HUG) and representatives from the construction sector. The meeting reviewed progress on implementing the Aug. 13 measures.

The FSC said it would prioritize 11 of the 20 financial support tasks aimed at boosting housing supply that can be carried out this month. It also plans to secure a budget for the Kamco fund and pursue amendments to relevant laws, including the Korea Housing Finance Corporation Act, while asking the financial sector to cooperate on restructuring the PF syndicated loan scheme and building additional sector-specific funds.

The Aug. 13 package called for expanding housing supply-related financial support from 26.3 trillion won ($19 billion) to at least 47.8 trillion won. The core measures include increasing public guarantees for viable PF sites and channeling Kamco's normalization fund and financial sector syndicated loans to distressed ones.

Financial institutions agreed to review their own implementation plans for distressed residential PF sites in the Greater Seoul area and examine the causes of delays in project normalization. The Ministry of Land, Infrastructure and Transport also asked the financial sector to actively channel funds into new construction financing.

The FSS will take charge of financial difficulties at PF sites. It will expand and rebrand its existing "Real Estate PF General Support Center" as the "PF Financial Difficulties Resolution Center," launching the revamped operation Tuesday. The center will receive complaints related to PF guarantees, the Kamco normalization fund and syndicated loans, then either resolve them directly or refer them to relevant agencies such as Korea Housing Finance Corporation, Kamco and financial industry associations.

The FSS will establish dedicated teams covering assessment management, syndicated loans and regulatory improvements, and will link reported difficulties to broader institutional reform efforts. Communication with PF-participating financial sectors — including banks, securities firms, insurers, credit finance companies, savings banks and community credit cooperatives — will be conducted through their respective industry associations.

Korea Development Bank will handle financial difficulties faced by construction companies. The bank will operate a "Construction Company Financial Difficulties Resolution Center" targeting the top 100 construction firms by construction capacity this year. When a construction company submits a financing complaint, Korea Development Bank will forward it to the relevant institution — typically the bank with the largest credit exposure to that company — and compile the outcomes for a monthly report to the FSC.

The Aug. 13 package also includes plans to provide an annual average of 28.7 trillion won in public guarantees to viable PF sites over the next three years and to establish more than 3 trillion won in new Kamco PF normalization support funds. The bank and insurance sector PF syndicated loan facility will be expanded from 1 trillion won to 5 trillion won.

FSC Vice Chairman Kwon Dae-young said Friday's meeting "will serve as a starting point for resolving the pressing social problem of a housing supply cliff through active communication between the financial sector and the construction industry," adding that "the government will continue to spare no institutional support to promote housing supply."

Kim I-tak, first vice minister of land, infrastructure and transport, stressed that "a smooth supply of funds must underpin efforts to expand housing supply," and said the ministry and the FSC, along with the construction and financial industries, "will cooperate closely to achieve our supply targets off the back of this meeting."