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

SEOUL (Reuters) – 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% of total assets, compared with 57% 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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