The savings bank industry plans to complete payment of its contributions to the New Leap Fund (bad bank) within this month. Once payment is finished, it will be the second after the banks.
As of the 15th, according to the financial industry, the Korea Federation of Savings Banks said that about 90% of its 79 member firms have completed payment of their contributions to the New Leap Fund. The federation expects all 79 firms to finish payment within this month.
The New Leap Fund is a long-term support program for borrowers in arrears jointly led by the Financial Services Commission and Korea Asset Management Corporation (KAMCO). It purchases unsecured arrears claims held by financial institutions that are at least seven years old and 50 million won or less, then writes them off or adjusts the debt. The New Leap Fund totals 840 billion won, funded by 400 billion won in government finances and 440 billion won in contributions from the financial sector. Banks will bear about 360 billion won, life and non-life insurers 40 billion won, specialized credit finance companies 30 billion won, and savings banks 10 billion won.
The savings bank industry finished agreeing on the contribution criteria the fastest among secondary financial institutions on the 5th of last month. Of the 10 billion won contribution, half will be borne equally by savings banks, and the other half will be borne differentially according to the share of total loans as of the end of the third quarter of last year.
Among banks, 20 companies decided to allocate contributions based on 2024 net profit reflecting the size of arrears claims and provisions for loan losses, and on Dec. 1 were the fastest in the financial sector to complete payment. The credit finance industry, including card companies and capital companies, also agreed at the end of last month to allocate contributions according to their share of arrears claims held. The life and non-life insurance sectors are in talks on the contribution criteria.
An official in the savings bank industry said, "We are quickly completing payment as part of the government's win-win financial cooperation."