KAMCO's Awesome Mission

State-run asset management co. to buy toxic assets from banks, help SMEs, poor households to recover financial health

Chairman & CEO Lee Chol-hwi of Korea Asset Management Corp. (KAMCO) said in his New Year's speech that KAMCO will operate under an emergency system to overcome the financial crisis and the entire company will be mobilized to get things done.
The company will do everything possible to take over soured assets and resolve them as quickly as possible to help get the financial system back on track. KAMCO will at the same time help those who have not had access to financial relief and the recovery of the trust of the general public, the top KAMCO executive said.
Lee said KAMCO, as the last financial safety net, needs to take extraordinary measures to overcome the crisis and is determined to do its job even if it takes changes in its structure and personnel.
Announcing "Complete Strategies for All," and "Boundless Changes to Cope with an Ever Changing Situation" as the themes for the management's objectives for this year, Lee emphasized that the company should prepare the best means to overcome crises and its organization should be flexible and able to change to cope with crises.
The top manager at KAMCO said the company's four key management objectives are to strengthen its role in bringing stability to the financial market; to recreate the value of public service; to expand the state treasury income; and to strengthen its internal value.
KAMCO will purchase 1.3 trillion won worth of project financial loans from mutual savings companies, in addition to soured household loans and loans provided to SMEs totaling 3 trillion won. The company will continue to take over bad assets from banks as they develop with funds created by selling asset backed securities made with bad assets taken over from the financial community.
CEO Lee said on Dec. 11 that KAMCO will increase the purchase of toxic assets of commercial banks, which need extra funds to lift their BIS ratio. The company initially set aside 800 billion won to buy up sour financial assets for 2008, 700 billion won of which has already been spent for that purpose. But if banks want to sell their toxic assets, KAMCO will make room in its budget and take them over. KAMCO will have spent a total of 1.7 trillion won on bad assets from banks and savings and loan companies' project loans that went sour, twice the scale of its initial budget for the purchase of bad loans.
Lee said KAMCO will take over bad assets of banks as per requests, not through open bids, in order to liquidate the non-performing assets of the banks. KAMCO will use 390 billion won from the issuance of its bonds and cash from its various accounts to buy bad assets from banks. KAMCO will increase funds allocated to buy project financing loans from savings banks to 1.7 trillion won from the 1.3 trillion won initially allocated.
The chairman said KAMCO will also take over 3 trillion won worth of household and SME bank loans in default to preempt the further spread of the financial crisis. Banks will be able to provide liquidity to construction companies with PF loans to keep them afloat. Lee said KAMCO will also take over housing loans in default to prevent a further decline of housing prices and help bring stability back to the financial market to ultimately get financial institutions back on track. If bad loans increase rapidly as the financial crisis deepens, KAMCO will buy bad assets. Lee said KAMCO will come up with various measures to help the financial institutions including the purchase of bank-held real estate in order to make them liquid.
Chairman Lee said KAMCO will only take over toxic bank assets as decided by a public accounting firm to be designated to analyze the banks bad assets case by case.
KAMCO will also take care of those who don't have access to loans including poor households so that they can recover their credit through their own means and the help of KAMCO. The company should do it as its public interest mission to help build a social safety net, the CEO said. Since 2004, the company has been operating the Bad Bank One Mind Finance and Hope Collection, along with the credit recovery welfare program, providing support to help some 930,000 people rebuild their credit.
This year, KAMCO plans to help some 480,000 borrowers in default through the forgiveness of loans and cuts in interest rates, along with some 240,000 borrowers by reducing interest rates and switching their loans to ones with low interest rates. nw

Chairman & CEO Lee Chol-hwi of Korea Asset Management Corp. (KAMCO)