In his inauguration speech at a ceremony on Nov. 18 at the Busan International Financial Center, Chairman and CEO Moon Chang-yong of Korea Asset Management Corp. (KAMCO) said he would jumpstart the organization’s ability to take over bad loans from financial institutions.
The new CEO said KAMCO will reform the system to revive the financial strength of the general public by taking advantage of its know-how in managing the National Happiness Fund while making its relationship with the Korea Inclusive Finance Agency strong.
KAMCO will take over bad loans from financial institutions as rapidly as possible to safeguard their sound operations and expand its moves to support the recovery of the health of individual credit.
Moon also called on KAMCO to participate in the capital market in coordination with civilian sector financial firms and supplement the civilian defaulted asset market. He also said KAMCO should participate in the corporate restructuring so that it would become the sole financial organization to take care of public debts in default by taking over the job of the restructuring public default debts from the policy financial organizations like the Korea Technology Credit Guarantee.
Moon also said the restructuring of the shipbuilding, maritime industry and SMEs should be expedited as the linchpins of the national economy.
He added that he would like to see KAMCO making huge contributions to the national economy by vitalizing the redevelopment of the old public real estate pieces to pave the way for increased public sector earnings and advancing the management system for state- and public-owned assets.
The new CEO also remarked that he would like to see KAMCO make a greater contribution to collect defaulted tax payments through effective means, including reform of the management system and redevelopment of old and idle public real estate. Their market values would be boosted to help increase state and local administrative earnings.
KAMCO was established by the act of Effective Resolution of Financial Institution NPLs and Establishment of KAMCO in 1962. Since its establishment, KAMCO has purchased and resolved financial institutions NPLs, restructured corporations, assisted in the restoration of credit-worthiness of the financially-underprivileged, managed state-owned properties, and collected overdue taxes as a quasi governmental entity. As the perpetual restructuring institution, KAMCO serves the development of the nation's economy and financial institution, maximizes government revenue by effectively managing government commissioned state-owned properties and in times of crisis, KAMCO stands in the front lines to support households, corporations, financial institutions, and even the government as the nation's economic safety-net.
KAMCO played an important role in facilitating the restructuring process and helping to develop financial markets. First, KAMCO purchased distressed assets from banks and other financial institutions, which allowed lending to resume at a time when liquidity was scarce. This objective was complemented by increased supervision to ensure that banks were operating on sound commercial principles. Second, KAMCO’s resolution of NPLs contributed to the good progress made in Korea in recovering public funds injected by the government for financial sector restructuring. In addition, KAMCO disposed of many of these distressed assets through a number of innovative methods, including by issuing asset-backed securities (ABS), which launched an important new market in Korea.
KAMCO played a market-making role by overcoming such informational and coordination problems. Its active marketing activities brought together and intermediated between sellers and investors of NPLs. Most notably it successfully convinced major international players looking for distressed assets to become interested in the Korean market. Participation of foreign investors, in turn, encouraged participation of domestic investors. Initially KAMCO’s catalytic role was monopolistic, but, as the market deepened, it became much less dominant.
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