IMF begins resolving 1.8 trillion in non-performing loans for the first time in 25 years… Jeong Jeong-hoon “Sold to New Leap Fund”
Limitations in selecting ‘speculative debt’ were pointed out ahead of the first sale of the New Leap Fund
[서울경제TV=김도하 기자] It has been revealed that Korea Asset Management Corporation (KAMCO) has not been able to liquidate approximately 1.8 trillion won in non-performing loans acquired from the financial sector during the foreign exchange crisis for 25 years.
KAMCO is expected to pursue a plan to sell and adjust debt through the ‘New Leap Fund’, a bad bank promoted by the government this month.
According to the ‘Management status of bonds acquired at the time of the IMF’ submitted by KAMCO by Park Chan-dae, a member of the National Assembly’s Political Affairs Committee, KAMCO has acquired 228,293 individual and corporate non-performing loans (KRW 5.1577 trillion) since 2000, and as of the end of August this year, 21,433 cases (KRW 1.7704 trillion) are still outstanding. It remains.
Of these, 18,010 personal debts (KRW 366.2 billion) and 3,423 corporate debts (KRW 1.4042 trillion).
In response to a question from Democratic Party lawmaker Park Chan-dae at the National Assembly’s Political Affairs Committee audit held at the Busan International Financial Center (BIFC) in Nam-gu, Busan on the 23rd, Camco CEO Jeong Jeong-hoon said that long-term delinquent bonds acquired at the time of the IMF can also be adjusted to the New Leap Fund.
Representative Park asked on this day, “Can the 1.77 trillion won in long-term delinquent bonds acquired by KAMCO during the IMF period be adjusted to the New Leap Fund?”
In response, President Jeong responded, “Of course it is possible. We plan to sell bonds to the New Leap Fund for the first time this month, and for the first time, we plan to sell bonds to KAMCO and the National Happiness Fund.”
The New Leap Fund is a program that purchases long-term delinquent bonds of more than 7 years and less than 50 million won and supports forgiveness or installment repayment according to the debtor’s ability to repay. Speculative, entertainment and foreign bonds are excluded.
However, in some cases, moral hazard and equity controversies have been raised in that funds raised with public funds may include speculative debt.
The National Assembly inspection also pointed out that the New Leap Fund has a structure of purchasing long-term delinquent bonds from financial companies in bulk, making it difficult to distinguish the nature of individual debt.
People Power Party lawmaker Kim Sang-hoon said, “Because we purchase non-performing loans in bulk from financial institutions, we know that it is impossible to distinguish whether an individual’s debt is a gambling debt or a gambling debt.” He asked, “Can you classify each type of debt?”
President Jeong said, “As you pointed out, it is impossible to completely distinguish whether it is investment funds or gambling funds,” and added, “We will do our best to exclude debts borrowed from securities companies.”
He added, “After the purchase, we will look at the business code on the loan document and if it is a speculative loan or a business loan for an entertainment bar, we will repurchase it rather than write it off.”
Meanwhile, in addition to resolving non-performing loans, KAMCO is also considering ways to utilize idle state-owned assets. President Jeong said, “We are discussing with the Ministry of Strategy and Finance and the Ministry of Land, Infrastructure and Transport on ways to convert unused state-owned land, such as abandoned police stations, into housing supply.” /itsdoha.kim@sedaily.com
