Korea Asset Management Corp. (KAMCO) has fulfilled its role by providing a safety net by effectively disposing NPLs from financial institutions, corporations, households and the government.
During the Asian Financial Crisis in 1997, KAMCO played a key role in overcoming the impasse by inputting 39.2 trillion won of public funds in order to acquire 111.3 trillion won of NPLs from financial institutions.
With the primary objective of minimizing the burden for the public, NPLs that were purchased from financial institutions were promptly and efficiently resolved through the management and operation of the NPL Resolution Fund, exceeding the recovery of the fund by 4.3 trillion won. This unique achievement in NPL disposition and restructuring was presented as an international model for overcoming financial crises at the G20 Financial Ministers and Central Bank Governors Meetings.
After the expiration of the NPL resolution fund in November 2002, KAMCO continued to acquire and resolve financial institution NPLs through its own account. In doing so, KAMCO supported the soundness of financial institutions by carrying out the role of a restructuring institution and supporting private credit recovery.
At the end of 2008, as the insolvent PF loans of savings banks became a threat to the stability of the nation’s financial structure, KAMCO purchased 500 billion won PF loans and another 1.2 trillion won PF loans in March 2009. In total, 1.7 trillion won was proactively applied to the prevention of fiscal deterioration among financial institutions. In addition, KAMCO also continued to acquire household NPLs through its own account thus carrying on its role as a social safety net.
In 2009, as the default rate of financial institutions rose, the possibility of a massive NPL outbreak appeared. KAMCO realized that its own fund might not be enough to resolve the looming crisis and thus initiated the 40 trillion won Restructuring Fund to ward off the pending catastrophe.
KAMCO planed to terminate the Restructuring Fund on Dec. 31, 2014 and revert remaining assets to the National Treasury.
Other steps that KAMCO took to combat the financial liquidity crisis include the creation of a Shipping Fund to support the domestic shipping industry. In the near future, KAMCO will expand its acquiring target assets to include restructuring company owned and defaulted corporate loans and take every action necessary to facilitate the optimal resolution of all NPLs acquired during the fund's administered period.
South Korean asset management companies are increasingly eyeing global markets to seek higher returns, as local capital markets face low interest rates.
The number of overseas offices operated by Korean asset management companies more than doubled to 35 as of the end of 2015 from 14 in 2008, according to data by the Korea Financial Investment Association.
Among 35, 14 are run by Mirae Asset Global Investments, four by Asset Plus Investment Management, three by Samsung Asset Management and another three by Korea Investment Management.
According to Mirae Asset Global Investments, it has 12 subsidiaries and two offices globally. Out of its 95 trillion won ($79.7 billion) assets under management, 34 percent, or 32 trillion won, are allocated in overseas markets, the company said.
Mirae Asset currently sells 1,268 financial products in 32 countries including Korea. The outbound funds sold through its overseas subsidiaries surpassed 2.5 trillion won in 2015.
Samsung Asset Management, the nation’s largest asset management firm, is also gearing up its overseas business.
Mirae Asset recently announced that it would seek to establish a joint venture with China’s CCB Principal Asset Management to operate exchange-traded funds in China.
Managing 200 trillion won in assets, the company said it has agreed to provide advisory for three to five new ETF products to be launched under the Chinese company within this year.
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