KAMCO Expands Its Role

Company sets up 20 tln won fund to purchase bad assets from financial institutions, shipbuilders and others in trouble

The Korea Asset Management Corporation (KAMCO) was set up to support the restructuring of financial institutes and firms starting in August.
KAMCO disclosed on July 31 that it would purchase restructuring assets of financial institutions and companies beginning from August through a restructuring fund formed earlier with funds of 20 trillion won ($16.23 billion) this year.
Such a move is KAMCO’s latest effort to preemptively support corporate restructuring via the purchase of assets being put up for sale by companies and financial institutes.
KAMCO has decided to buy a total of 4 trillion won worth of assets including realties or unsold apartments owned by firms and non-business assets held by financial institutions.
The company also plans to purchase ships through a previously established 4 trillion-won maritime fund upon the release of its second purchase notice during September or October at the earliest.
To date, KAMCO has completed the purchase of 17 vessels after primarily selecting 62 vessels among a total of 72 vessels that had been put up for sale in June. Negotiations are underway with shipping companies regarding the remaining 45 ships.
In addition, in order to facilitate financial institute restructuring, KAMCO will buy project financing (PF) loan bonds totaling 15 trillion won and corporate loan bonds owned by financial institutions.
KAMCO has decided to buy PF loan bonds at local banks as well as across the financial industry including insurers, securities firms, assets management companies, lending institutions, merchant banks and mutual financial companies. On May 20, the company purchased banks’ PF loan bonds scaled at 758.2 billion won ($617 million) in a bid to preemptively counteract the global financial crisis. KAMCO held an event to celebrate the launch of the Restructuring Fund, which was established on May 13.
CEO Lee Chul-hwi restated the readiness and will of staff members to overcome the financial crisis and efficiently manage the Restructuring Fund. He also reiterated that the Restructuring Fund was established as an initiative to counteract the uncertainty of the financial industry and all efforts should be made to overcome the financial crisis.
Lee has also been leading KAMCO’s program to provide loans at low interest rates to poor households around the country to relieve their financial problems exacerbated by exorbitant bank loan rates. Named the “Debt Restructuring Program,” KAMCO has been expanding its micro-credit program with the motto “KAMCO with a Warm Heart” with Lee taking full responsibility, as small loans to poor households are very risky since they have no assets to pledge as collateral. His determination to provide such loans has earned Lee the nickname, “The Economic Doctor,” as most of the loans would be unrecoverable because of the poor financial conditions of the borrowers.
Often, company officials wondered and questioned the CEO’s decision to undertake such a risky program by KAMCO when there are already organizations in place to help the needy. But Lee had been adamant that KAMCO should carry out such a program, although it is not a social organization.
He insisted that financial support to the poor cannot be done by one or two financial organizations alone, but it should be done in a diversified manner involving a number of entities. KAMCO can have very good results as it has organization, financial strength and know-how and can put them to good use in helping relieve the financial problems of the poor.
He said he would like some 1 million people who have received KAMCO’s help to remember KAMCO as a company that gave a little hope and happiness to them, although they had come to the company during times of trouble.
The CEO is also determined to be fair to a private bad asset company to be set up by commercial banks in the country, although he fears tough competition, as the banking industry feels that KAMCO has been selling bad assets at rock-bottom prices since it has no competition.
He said he is rather uneasy about the speed with which the new bad bank is being set up, although he fully understands the reasons behind the move to set it up. He said he is very interested in who will lead the projected bank.
A graduate of Hitotsubashi University in Japan with a degree in finance, CEO Lee also worked in Tokyo as a financial attache at the Korean Embassy and had another stint in Japan as a director for the Japanese-led Asian Development Bank, altogether spending 13 years in Japan.
He has many Japanese friends including some leaders in the Democratic Party who came to power in recent elections, replacing the ruling Japanese Liberal Democratic Party.
Lee said he will try to cement further Korea-Japan ties, taking advantage of his Japanese connections. nw

President Lee Chul-whi of the Korea Asset Management Corp.