'Debt Relief in Full Swing' Establishment of Bad Bank in August, Start of Bond Purchase in October

[Financial News] The 'Long-term Delinquent Bond Debt Adjustment Program (Bad Bank)', which purchases and extinguishes long-term delinquent bonds of 50 million won or less that have been overdue for more than 7 years, will be established next month and will begin purchasing delinquent bonds in October.
The Financial Services Commission held an expert meeting on the 11th, presided over by Secretary General Kwon Dae-young, to review the long-term delinquent bond debt adjustment program and stated, "We will announce the detailed plan for the long-term delinquent bond debt adjustment program as quickly as possible during the third quarter."
The Korea Asset Management Corporation (KAMCO), which is in charge of operating the program, will prepare practical measures to minimize concerns related to the possibility of forgiving immoral debts such as those in the entertainment industry and excessive support for foreigners.
The primary and secondary financial sectors plan to support 4 trillion won out of the 8 trillion won required for the debt adjustment organization. 
The Korea Federation of Banks stated, "This is an important policy for restoring people's livelihoods promoted by the new government, and considering its urgency, we will cooperate quickly as the second supplementary budget has been organized."
The associations of life and non-life insurance companies and other secondary financial sector associations also stated, "As the burden of managing long-term delinquent bonds in the secondary financial sector is significantly reduced by the bond purchase of the debt adjustment organization, we will play the necessary role."
The Financial Services Commission expects that through this program, 11.34 million people's long-term delinquent bonds worth 16.4 trillion won will be extinguished or adjusted.
Director Kwon emphasized, "Only the debts of 'truly difficult people' who have no repayment ability equivalent to bankruptcy will be extinguished after a thorough repayment ability review based on credible information."
At the meeting, issues such as the difficulty in issuing documents by financial companies when delinquent debtors apply for bankruptcy or rehabilitation, and problems such as card issuance after discharge were also discussed.
The Financial Services Commission plans to form a 'Pan-Financial Task Force (TF)' involving all financial associations and related institutions to quickly prepare solutions for these issues.
Meanwhile, the Financial Services Commission and KAMCO will conduct a naming contest for the long-term delinquent bond debt adjustment program through the KAMCO website from the 14th to the 1st of next month.
Anyone can propose a name, and the selected program name will be announced next month. 


sjmary@fnnews.com Seo Hye-jin Reporter