Bank of Korea says non-bank firms face stress from weak property market

SEOUL  – South Korea’s financial firms have a low contagion risk from troubles at U.S. and Swiss banks, but some non-bank firms are facing increased stress from the sluggish property market, its central bank said in a report on Thursday.

South Korean banks have low exposure to risky assets and have been under strict supervision, with the ratio of debt and equity securities standing at 18 percent of total assets, compared with 57 percent at the recently bankrupt Silicon Valley Bank, it said.

The sluggish real estate market, however, poses an increased risk for some non-bank financial firms as their exposure to property development-linked lending rose sharply in recent years, the Bank of Korea said in the scheduled report.

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