FT.com / Home UK / UK - Crisis in S Korean building industry

FT.com / Home UK / UK - Crisis in S Korean building industry: "Crisis in S Korean building industry By Anna Fifield in Seoul Published: September 21 2007 03:00 | Last updated: September 21 2007 03:00 South Korea's mid-sized construction companies are collapsing like houses of cards, intensifying fears of a looming liquidity crunch in Asia's third-largest banking market. Korea has remained largely immune to the sub-prime woes that have afflicted international markets. But a series of smaller construction companies has been defaulting on project financing loans as they struggle to sell apartments outside Seoul. ADVERTISEMENT That has raised concern about a further deterioration in the quality of loans to construction companies and investors are beginning to worry about the impact on Korean banks. 'This is a critical moment,' said Chung Dong-joo of the Korea House Builders' Association. 'We call this a 'bankruptcy surplus', as companies have the ability to raise capital but are going bankrupt because of the high number of unsold apartment units. This hinders capital circulation and has plunged small and medium-sized companies intoa crisis.'"