Woori, Citibank Korea cope with hefty bad loans

The two lenders grapple to slash their bad loans to comply with government's bad loans requirement.

Woori Bank and Citibank Korea are suffering from a pile of non-performing loans with the government-imposed deadline to slash bad-loan ratios to under 1 percent fast approaching.

According to the Korea Times, the Financial Supervisory Service (FSS) said that they are the two commercial banks in Seoul whose non-performing loans make up more than 1.6 percent of their total lending.

As of the end of this September, the bad loan ratio for Woori was 1.91 percent, up 0.11 percentage points from three months ago, and that for Citibank stood at 1.64 percent.

Woori is required to do away with more than 1 trillion won ($863 million) in bad loans from its balance sheet, while the amount for Citibank is hundreds of billions of won.

The guidelines are not compulsory but the FSS is considering penalties for lenders that fail to reach the set goals.