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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] Financial institutions’ credit exposure to five affiliates of JungAng Group that have entered rehabilitation proceedings is estimated at around 800 billion won, according to a report by NICE Investors Service.
In its report released on June 16, the agency said JTBC defaulted on 20.6 billion won in debt on June 12. Subsequently, four affiliates—JoongAng Holdings, JoongAng P&I, Megabox JoongAng, and ContentreeJoongAng—filed for court-led rehabilitation on June 14, followed by JTBC on June 15.
Credit exposure refers to the total amount of credit extended by financial institutions, such as loans, to a specific borrower. Including eight affiliates—among them JoongAng Ilbo, SLL JoongAng, and JoongAng Ilbo M&P—the financial sector’s total exposure is estimated at approximately 1.3 trillion won.
By sector, banks accounted for the largest share at 832.9 billion won, followed by specialized financial institutions at 164.2 billion won, securities firms at 125.1 billion won, and credit finance companies at 79.7 billion won.
Among Individual institutions, Hanyang Securities was identified as having the largest exposure relative to its assets and capital. Its book exposure to JungAng Group affiliates stands at approximately 84 billion won, compared to equity capital of 647.8 billion won as of end-March.
Breakdown by borrower shows exposure of 54 billion won to JTBC and 30 billion won to JoongAng Ilbo. The JTBC-related exposure includes 18 billion won tied to a special purpose vehicle (SPC) and 36 billion won in commercial paper.
NICE Investors Service warned that, following JTBC’s entry into rehabilitation, asset quality deterioration and increased provisioning burdens related to its 54 billion won exposure are expected. The scale of potential losses will depend on factors such as debt maturities, progress of rehabilitation proceedings, and recovery rates.
However, the agency noted that Hanyang Securities’ exposure is secured by collateral assets managed under a trust structure, with transfer security agreements in place. These collateral arrangements are expected to support recovery prospects and partially mitigate the negative impact on the firm’s credit profile.
NICE added that it will closely monitor the cash-generating capacity of the collateral assets and recovery outcomes of related claims in assessing Hanyang Securities’ creditworthiness.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
