'The Success Story of KAMCO'

KAMCO has become a target of benchmarking from emerging economies for NPA resolution.

Korea Asset Management Corp., marking its 50th anniversary next year, does not rest on its track record of domestic non-performing assets (NPAs) resolution and corporate restructuring, but aims at becoming a homegrown investment bank cum integrated asset management company.
KAMCO has been recognized as an NPA resolution and restructuring agency in Korea and abroad as the corporation has been credited with playing a major role in the recovery of the national economy during difficult times, particularly the 1997 Asian and the 2008 global financial crisis, through the resolution of non-performing loans, corporate restructuring.
KAMCO has already become a target of benchmarking from emerging economies that wish to establish non-performing assets disposition agencies, striving to take their cues from KAMCO's expertise and experiences. These remarkable achievements were presented as a best practice for overcoming a financial crisis to leaders who huddled together at the G20 Summit in London in April 2009 to tackle the financial crisis.
The corporation has established an overseas network by signing MOUs for mutual cooperation and brisk exchanges with 17 institutions in 11 countries, including the top four state-run asset management companies in China. Approximately 400 officials from related financial institutions from seven countries, including China and Russia, participated in educational programs KAMCO offered on 22 occasions to transfer and share its experiences and expertise. "In the latest development, the corporation plans to sign an MOU on cooperation with Mongolia's central bank. KAMCO is poised to offer a consulting service on an ADB-initiated project to establish a state-run NPA resolution institution in Mongolia," KAMCO Chairman & CEO Chang Young-chul said.
Chang wants to pitch his corporation's success story when he attends the Annual Meetings of the World Bank and the International Monetary Fund that will take place in Washington, D.C., from Sept. 23-25. Chang, a member of the Korean delegation to the annual meetings, will bring with him copies of "The Success Story of KAMCO," which will be distributed for free at the annual meeting, a case study book containing diverse knowhow and success story cases on NPA resolution, corporate restructuring, state-run property management and financial support for low-income people. "KAMCO has produced similar internal documents, but this book is the first official publication of its kind by KAMCO, which reflects on the assessment of its track record for the past half century and braces for what's in store in another 50 years," he said.
KAMCO, established as a bad asset resolution agency in 1962, has always been synonymous with success, as its predecessor, Sungup Kongsa, literally means.
Commenting on the vision of KAMCO and its upcoming 50th anniversary, Chang said, "KAMCO aims at not only becoming a homegrown investment bank of the national economy charged with transforming non-performing assets into value-added ones by systemizing the expertise and experiences the corporation has accumulated as a reliable safety net of the national economy and conducting programs to nurture manpower in order to ramp up its capabilities, but also evolving itself into an integrated asset management corporation specializing in the management of the nation's diverse assets." he held positions such as the director general of the Economic Policy Bureau of the Ministry of Strategy and Finance and the Executive Director of the Executive Office of the Presidential Council for Future & Vision before taking office as the KAMCO chairman. The following are excerpts of an interview between NewsWorld and the KAMCO chairman in which he spoke about KAMCO's past, present and future.
Question: KAMCO will mark the 50th anniversary of its establishment next year. Will you introduce to our readers your corporation's mission and responsibilities?
Answer: Since its establishment in 1962, KAMCO has served as a safety net of the national economy. KAMCO, as its name indicates, literally means a corporation responsible for the management of assets in Korea.
When our corporation is introduced, KAMCO is compared to the kidneys of a human, which maintain health by filtering wastes within the body. Likewise, KAMCO is charged with helping all the parties ― households, financial institutions, companies and the government ― regain health by absorbing the primary repercussions of market failures, caused by an economic crisis.
For instance, KAMCO played a pivotal role in overcoming the 1997 Asian financial crisis by injecting 39.2 trillion won in public funds to take over non-performing loans (NPLs) from financial institutions and retrieving 45.7 trillion won through disposition. During the global financial crisis, 20 trillion won of non-performing assets were acquired from financial institutions, and were resolved as proactive measures to stabilize financial markets.
The so-called Credit Recovery Funds, designed to reschedule debt servicing and acquire delinquent loans and provide guarantees so that high-interest loans may be swapped for lower-interest loans, are in place to help low-income delinquents and financially underprivileged people expedite credit recovery.
In addition, KAMCO is charged with managing 280,000 plots of state-own land across the nation on top of the management and development of public properties entrusted by local governments.
Q: I understand that KAMCO greatly contributed to helping Korea tide over the 1997 Asian financial crisis. Can you give an assessment of the achievements your corporation has made so far?
A: The Korean government commissioned KAMCO to establish the Non-performing Assets Management Fund in 1997 to resolve non-performing loans from financial institutions which surged to unprecedented levels during the 1997 Asian financial crisis. The corporation raised a combined 39.2 trillion won in public funds and acquired 111.5 trillion won worth of non-performing loans from financial institutions, thus playing a part in helping the nation overcome the financial crisis by dramatically improving their financial standing and liquidity woes. KAMCO registered an unprecedented record high of 94 percent in the public fund retrieval rate by disposing of 79.2 trillion won worth of NPLs and recovering 37.5 trillion won as of the end of August 2011. This remarkable achievement was presented as a best practice for overcoming a financial crisis to leaders who huddled together at the G20 Summit in London in April 2009 to tackle the global financial crisis.
Capitalizing on its capability, KAMCO also acquired 20 trillion won worth of NPAs from financial institutions as a proactive means to contain the repercussions of the 2008 financial crisis, thus contributing to stabilizing the domestic financial markets. The corporation will strive to do its best as a solid safety net of the national economy whenever a financial crisis occurs.
Q: KAMCO has been recognized as an NPA resolution and restructuring agency in Korea and abroad. Do you have plans to make inroads into overseas markets by making the most of its expertise?
A: KAMCO has already built a foundation for entering foreign markets, based on the expertise and experiences in NPA disposition and restructuring of corporations acquired in the course of overcoming the financial crises. In particular, we have contributed to the development of the financial markets in regime-changing states and emerging economies. We've established an overseas network by signing MOUs for mutual cooperation and brisk exchanges with 17 institutions in 11 countries, including the top four state-run asset management companies in China. Approximately 400 officials from related financial institutions from seven countries, including China and Russia, participated in educational programs KAMCO offered on 22 occasions to transfer its experiences and expertise.
KAMCO, now registered as an official consultant to international organizations such as the Asian Development Bank (ADB) and the African Development Bank (AFDB), has successfully executed four consulting service projects, including the establishment of a non-performing assets disposition agency in Vietnam, boosting its and Korea's global standing. In the latest development, the corporation plans to sign an MOU on cooperation with Mongolia's central bank. KAMCO is poised to offer a consulting service on an ADB-initiated project to establish a state-run NPA resolution institution in Mongolia.
We're striving to ramp up collaboration with international organizations, as KAMCO and ADB jointly hosted an international seminar titled "Restructuring Market Asia: Development and Evolution" at the ADB headquarters in Manila in September 2008, and the two are seeking to hold another seminar in celebration of KAMCO's 50th anniversary next year.
KAMCO is aggressively seeking to upgrade and develop its expertise and experiences into a profit-taking exportable model by making the most of the overseas network the corporation has already built.
Q: KAMCO has published "The Success Story of KAMCO," a case study book containing diverse knowhow and success story cases on NPA resolution, corporate restructuring, state-run property management and financial support for low-income people that the corporation has accumulated. Will you introduce it?
A: The publication deals with 14 exemplary cases in four categories ― corporate restructuring, NPA acquisition & disposition, credit recovery & credit delinquent support and asset management. KAMCO has produced similar internal documents, but this book is the first official publication of its kind by KAMCO, which reflects on the assessment of its track record for the past half century and braces for what's in store in another 50 years. It may be made available as a university undergraduate and graduate students' case study book. Another book will be published to deal with cases that were not covered by the current issue.
As to credit recovery & credit delinquent support, the book introduces the Credit Recovery Fund, established in 2008. The integrated financial support system for low-income people, differentiated from other financial mechanisms, has yielded tangible outcomes despite its short period of operation ― having provided 1.8 trillion won in financial support to approximately 285,000 people and self-sufficiency consulting services to some 1.29 million people as of the end of this past August.
Q: Will you elaborate on what you see as KAMCO's vision?
A: KAMCO's responsibilities not only cover NPA resolution, but also include the retrieval of public funds, the auctioning of real estate and the management and development of state-owned properties, contributing to the development of the national economy and the interests of people in diverse fields.
On the basis of the accumulated expertise and experiences, KAMCO not only serves as a dependable safety net of the market economy, but also strives to establish itself as a full-fledged management agency of Korea's assets classified into state-owned properties, financial assets and credit assets. Its long-term vision calls for building a comprehensive state-own properties management system whose coverage will expand to not only tangible assets, but intangible assets as well as ways of managing state-owned properties in the post-unification era.
We contribute to the stabilization of financial assets markets through NPA resolution and restructuring while striving to regularize the operation of restructuring funds under a constant crisis management system. KAMCO plans to step up financial support for the financially underprivileged people by branding credit recovery funds so that credit assets of low-income people can be protected and executing duties to stabilize them while striving to take proactive steps to arrange job opportunities and create jobs.
KAMCO aims at not only becoming a homegrown investment bank of the national economy charged with transforming non-performing assets into value-added ones by systemizing the expertise and experiences the corporation has accumulated as a reliable safety net of the national economy and conducting programs to nurture manpower in order to ramp up its capabilities, but also evolving itself into an integrated asset management corporation specializing in the management of the nation's diverse assets. nw

KAMCO Chairman & CEO Chang Young-chul

The cover of KAMCO's case study book "The Success Story of KAMCO"

KAMCO Chairman & CEO Chang Young-chul holds an interview with NewsWorld's editorial staff at KAMCO's Gangnam office.

Photos by KAMCO, newsworld