Protect Motels and Korean Dry Saunas!

“Following restaurants and accommodations, Korean dry saunas (Zzimzilbang in Korean) are also on the blacklist among industries. Even with a 50 percent discount off of their regular prices of 4,000 won, they barely have any customers. Korean dry saunas that are unable to pay their debts are emerging one after another.” according to the small and medium enterprises credit loan team of Bank “A.”

An emergency has been declared over the control of overdue bank loans among commercial banks. With the economic slump and the aftermath of the anti-prostitution law in effect, overdue bank loans are springing up within domestic industries such as restaurants, accommodations, bars, Korean dry saunas, the clothing industry, and real estate.

Industries with Overdue Loans Struggling-

The owners of shops, barbershops, and a cafeteria within a Korean dry sauna in Uijungbu, Kyonggi Province visited the small and medium enterprise credit loan team of the main office of Bank “A” last month.

They asked for a loan extension in case a new undertaker purchases the Korean dry sauna, which is currently in debt.

Bank “A” used to give discretionary powers to its branch managers on loans amounting to three to four billion won when the economy was prosperous, but now branch managers are required to receive approval from the main office on all loans.

A loan officer from Bank “C” said, “In the case of restaurants and accommodations, their account books don’t help in controlling their debts because most of them downsize their account books when reporting income.”

More to Come Ahead-

A president of one bank expressed his concern at a financial council meeting held recently at the Bank of Korea, saying, “With a series of ‘unfavorable factors’ befalling the industry, such as the economic slump and the effects of the anti-prostitution law, there is a great possibility that the delinquency rate of independent enterprises will remain high for a long period of time.”

At an executive council meeting on October 18, the head of the Financial Supervisory Commission, Yoon Jeung-hyun, said, “It may be difficult to collect loans from restaurants and accommodations,” and ordered, “Watch the present loan condition of motels and restaurants carefully.”

Banks are reducing debt interest by rescheduling loan payments, and they are also postponing payment dates for delinquents. These efforts are just temporary measures, however, because the domestic economy is in such a slump.