On June 26, the Financial Services Commission held a meeting to review the results of negotiations regarding the purchase of eligible loans by the New Leap Fund, attended by the Financial Supervisory Service, Korea Asset Management Corporation (KAMCO), and representatives from nine major asset management companies.
A comprehensive investigation by the Financial Supervisory Service revealed that there are 167 asset management companies holding unsecured personal delinquent loans, with a total delinquent loan amount of 5.98 trillion won.
Among these, the loans eligible for purchase by the New Leap Fund, specifically those under 50 million won and overdue for more than seven years, amount to 1.0572 trillion won, held by 46 companies, affecting around 113,000 individuals.
Notably, the top three companies—Sangroksoo (723.5 billion won), K-Bista (281.7 billion won), and Genesis (25.8 billion won)—hold the majority of the eligible loans, totaling 1.0310 trillion won.
KAMCO has completed negotiations for the purchase of 1.0314 trillion won in loans with 45 companies, excluding Genesis. Loans from Sangroksoo and K-Bista, totaling 1.0056 trillion won, will be purchased by the end of this month, while the remaining 41 companies' loans, amounting to 25.8 billion won, will be acquired sequentially by the end of July.
Once the loans are transferred to the New Leap Fund, collection efforts will cease immediately. Debts of vulnerable groups, including basic livelihood recipients, severely disabled individuals receiving disability pensions, and veterans receiving living adjustment allowances or support funds, will be extinguished without separate repayment capacity assessments.
Other debts will be evaluated for repayment capacity, with those deemed unable to repay at a personal bankruptcy level having their debts extinguished within one year, while those with significantly inadequate repayment capacity will receive debt adjustment support.
The Financial Services Commission expects that this purchase will allow approximately 110,000 individuals to resume normal economic activities after being relieved from long-term collection and interest burdens.
Negotiations with Genesis, which have not yet been finalized, will continue. Sangroksoo, established during the credit card crisis in 2003, plans to sell approximately 130 billion won in remaining non-eligible loans to KAMCO before proceeding with liquidation.
Financial authorities are also set to strengthen monitoring of the distressed debt market, as increased liquidity in the financial market could lead to rising prices for distressed loans and pressure for higher recovery rates, potentially resulting in excessive collection efforts.
The Financial Services Commission stated, "We will closely monitor trends in the delinquent loan securitization market and consider institutional improvement measures as necessary."
* This article has been translated by AI.
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