Corona Crisis: National Economic Safety Board’s Role in New Start Funds
Korea Asset Management Corporation’s Role in Economic Stability
Table of Contents
- Korea Asset Management Corporation’s Role in Economic Stability
- Korea Asset Management Corporation’s Role in Economic stability
- What is the Korea Asset Management Corporation (KAMCO)?
- What role does KAMCO play in the Korean economy?
- How has KAMCO responded to past economic crises?
- What are the key accomplishments of the “New Start Fund”?
- Key Milestones of KAMCO’s involvement in Crisis Management
- What is the future role of KAMCO?
The Korea Asset Management Corporation (KAMCO) has played a significant role in safeguarding the national economy since its establishment in 1962.It has acted as a buffer during various economic crises, including the IMF foreign exchange crisis, the global financial crisis, and the COVID-19 pandemic.
During the IMF crisis (1997-2002), KAMCO invested 39,222.1 billion won, utilizing resources from the government-established ‘bad debt clearance fund.’ This investment facilitated the acquisition of 111,649.7 billion won in distressed assets from financial companies, contributing to the early stabilization of the financial system. Through advanced financial techniques like debt adjustment, international bidding, asset-backed securities (ABS), and mergers and acquisitions (M&A), the company recovered 46,956.8 billion won, exceeding the initial fund by 7.73 trillion won.
KAMCO’s role expanded during the 2008 global financial crisis. In May 2009, it acquired project finance (PF) bad debts from financial institutions, including savings banks, to support the soft landing of PF loans. This action bolstered the soundness of savings banks, stabilized the financial market, and prevented construction company failures by acquiring unsold apartments.
Furthermore, KAMCO acquired 33 ships from domestic shipping companies facing financial difficulties due to the global financial crisis. This intervention supported the restructuring of these companies,prevented the outflow of domestic ships,and revitalized ship finance markets. The corporation also recovered 6.59 trillion won, representing 107% of the 6.61 trillion won invested through the restructuring fund, leveraging its expertise in insolvent asset management.
In 2020, during the COVID-19 pandemic, KAMCO launched the ‘New Start Fund’ to provide relief. From April 2020 to June 2024, the fund assisted small business owners and self-employed individuals facing financial hardship by suspending debt collection, facilitating credit recovery.
By the end of January of this year, approximately 110,000 small business owners and self-employed individuals had applied for debt adjustments. Among them, 31,000 individuals with non-performing loans overdue for more than three months received a 70% principal exemption through debt purchase adjustments. Additionally, 33,000 borrowers at risk of insolvency benefited from an interest rate reduction of approximately 4.7 percentage points through intermediary debt adjustments.
According to Kwon Nam-joo, president of KAMCO, Looking back at the history of KAMCO, which celebrated its 63rd anniversary, we have the history of overcoming the crisis of the Korean economy.
Korea Asset Management Corporation’s Role in Economic stability
What is the Korea Asset Management Corporation (KAMCO)?
The Korea Asset Management Corporation (KAMCO) is a public corporation established in 1962. Its primary mission is to safeguard and stabilize the Korean economy by managing distressed assets and providing financial support during times of crisis.
What role does KAMCO play in the Korean economy?
KAMCO acts as a crucial buffer during economic crises. It intervenes to stabilize financial markets, support corporate restructuring, and assist individuals facing financial hardship.
How has KAMCO responded to past economic crises?
During the IMF Crisis (1997-2002)
- Invested 39,222.1 billion won to acquire distressed assets.
- Acquired 111,649.7 billion won in distressed assets from financial companies.
- Employed advanced financial techniques like debt adjustment and asset-backed securities.
- Recovered 46,956.8 billion won, exceeding the initial fund.
During the 2008 Global Financial Crisis
- Acquired project finance (PF) bad debts to support savings banks.
- Acquired 33 ships from domestic shipping companies to aid restructuring.
- Recovered 6.59 trillion won from the restructuring fund.
During the COVID-19 Pandemic (2020-2024)
- launched the ‘New Start Fund’ to provide relief to small business owners and self-employed individuals.
- Provided debt adjustments, including principal exemptions and interest rate reductions.
What are the key accomplishments of the “New Start Fund”?
The “New Start Fund,” launched during the COVID-19 pandemic,has provided notable relief. As of January 2025:
- Approximately 110,000 small business owners and self-employed individuals applied for debt adjustments.
- 31,000 individuals received a 70% principal exemption.
- 33,000 borrowers benefited from an interest rate reduction of approximately 4.7 percentage points.
Key Milestones of KAMCO’s involvement in Crisis Management
KAMCO has consistently demonstrated its ability to navigate economic challenges. The table below summarizes its responses to significant crises:
| Crisis | Actions Taken | Impact |
|---|---|---|
| IMF Crisis (1997-2002) | Acquisition of distressed assets, debt adjustment. | Stabilization of the financial system. |
| 2008 Global Financial Crisis | Acquisition of PF bad debts and ships, corporate restructuring. | Supported savings banks,revitalized ship finance. |
| COVID-19 Pandemic (2020-2024) | “New Start Fund,” debt adjustments. | Relief for small business owners and self-employed individuals. |
What is the future role of KAMCO?
KAMCO continues its mission to support the health of the Korean economy. In the words of Kwon Nam-joo, President of KAMCO, “Looking back at the history of KAMCO… we have the history of overcoming the crisis of the Korean economy.”