The government announced a package of measures designed to stimulate the housing market by helping first-time buyers and property investors, which included creating a bad bank to soak up soured construction loans, The Korea Times reported. Reducing transfer taxes for homeowners in Seoul and the metropolitan area and extending tax incentives for real estate investment trusts (REITs) and funds that buy unsold properties were also part of the plan unveiled Sunday.

With the property market becoming toxic, government officials are considering forcing big commercial banks to create and finance a new firm that would purchase soured construction loans, The Korea Times reported. But it’s debatable whether the so-called ``bad’’ bank would be enough to defuse the risks to financial stability posed by the decaying construction and real-estate market when a recovery seems unlikely in the foreseeable future.

With a series of Korean construction firms turning to court receivership to delay debt repayment, there is growing criticism that they are using the courts to find an easy way out of paying debts. Some accuse the construction companies of engaging in brinkmanship, the JoongAng Daily reported. Banks are blaming the builders for a lack of financial discipline, while the construction companies say the commercial and savings banks are forcing them into financial trouble by refusing to roll over loans.

In another blow to creditors, Dongyang Engineering and Construction Corp. filed for court receivership at Seoul Central District Court yesterday, underscoring the debt problems created by construction-related financing loans, the JoongAng Daily reported. The midsize builder cooperated with Sambu Construction, which also recently filed for court receivership, in building luxury villas in Naegok-dong, southern Seoul. “I can’t believe how entangled the situation is,” said a Financial Supervisory Service official.

South Korea's central bank left interest rates unchanged as expected Tuesday, opting to take stock after inflation pressures showed signs of moderating in March, but hinted afterward that it's likely to resume tightening in the coming months, The Wall Street Journal reported. The vote to keep the base rate steady at 3% was not unanimous, said Bank of Korea Governor Kim Choong-soo at a media briefing. He added that the central bank is "very determined" to keep normalizing its policy rate.

Takefuji Corp. said Monday that it has granted South Korean consumer lender A&P Financial Co. preferential negotiating rights to take over the failed Japanese consumer lender in what would be one of the biggest acquisitions by a South Korean firm of a Japanese company, but the unexpected development is leading bondholders and a rival bidder to question the way the lender's court administrators have handled the sale process, The Wall Street Journal reported.

The vice chairman of the nation’s financial regulator hinted Thursday that the financial authorities are against the consolidation between Woori Investment & Securities and Daewoo Securities, The Korea Times reported. “I wonder if it will work efficiently when financial firms are combined just to beef up their size,” Kwon Hyouk-se, vice chairman of the Financial Services Commission (FSC), said in a meeting with reporters. The 54-year-old life-time bureaucrat is also a nominee for the governor of the Financial Supervisory Service (FSS), the executive body of the FSC.

Korea Line Corp., the second-largest shipping company in South Korea, filed for Chapter 15 bankruptcy protection in New York on Friday, seeking to temporarily stay several pending U.S. legal disputes as it moves forward with a rehabilitation proceeding in South Korea, Bankruptcy Law360 reported. The Seoul-based company lodged the petition in the U.S. Bankruptcy Court for the Southern District of New York, indicating that it had nearly $61 million in liquid assets.

South Korea’s financial regulator said Tuesday that it has suspended one more savings bank reeling from massive construction financing loans defaults, The Korea Times reported. The Financial Services Commission (FSC) announced it had suspended Domin Savings Bank, based in Chuncheon, Gangwon Province, for six months. The lender closed its six branches there voluntarily earlier in the day for fear of a bank run. Domin is one of five savings banks that have failed to meet the government’s recommendation of a 5-percent capital adequacy ratio.

The historically high level of Korean household debt seems to be a ticking time bomb for the economy, but this isn’t keeping policymakers from encouraging people to borrow more to secure the concrete in the crumbling housing market, The Korea Times reported. The government is planning to announce a package of measures next month aimed at helping potential homebuyers and tenants. The crux may include loosening the country’s debt-to-income (DTI) and loan-to-value (LTV) ratios, which restrict the borrowing proportion of homebuyers in relation to their earning abilities.