The New Leap Fund will sequentially purchase 1.0314 trillion won in long‑delinquent bonds held by securitization specialists including Sangnoksoo and KB Star. About 108,000 people are expected to be freed from collection and arrears interest.
The Financial Services Commission said on the 28th that on the 26th it held a "meeting to review the results of talks on purchasing bonds from securitization companies for the New Leap Fund," chaired by Secretary-General Shin Jin-chang and attended by the Financial Supervisory Service, Korea Asset Management Corporation (KAMCO), and investors in nine major securitization companies, and decided as above.
A full survey by the Financial Supervisory Service (FSS) of securitization companies found that a total of 167 firms held unsecured personal arrears bonds as underlying assets, with arrears bonds reaching 5.9804 trillion won. Of these, 46 firms held 1.0572 trillion won (113,000 people) in New Leap Fund-eligible bonds (50 million won or less, in arrears for seven years or more). It was found that the top three—Sangnoksoo (723.5 billion won), KB Star (281.7 billion won), and Genesis (25.8 billion won)—held 1.031 trillion won in New Leap Fund-eligible bonds for about 110,000 people.
KAMCO completed talks to purchase bonds totaling 1.0314 trillion won with 45 firms excluding Genesis. It will buy 1.0056 trillion won in bonds from four firms, including Sangnoksoo and KB Star, at the end of this month, and will purchase the remaining 25.8 billion won in eligible bonds from 41 firms by the end of next month. Genesis is wholly owned by A-One Asset Loan Management and has said it needs time for legal review.
Once the bonds are transferred to the New Leap Fund, collection stops immediately. For the basic livelihood security recipients, people with severe disabilities, and veterans receiving living adjustment allowances and other socially vulnerable groups, the debt is written off without separate screening. For other bonds, after assessing repayment capacity, if the debtor has lost repayment capacity to a level equivalent to personal bankruptcy, the debt is written off within a year; if repayment capacity is otherwise significantly insufficient, debt restructuring is pursued.
The Financial Services Commission (FSC) said it expects that purchasing bonds from 45 securitization companies with completed talks will allow 108,000 people to escape the pain of collection and arrears interest and lay the groundwork to resume normal economic activity. It also decided to strengthen inspections and supervision across the nonperforming loan securitization market.
An FSC official said, "We will closely monitor market trends and, if necessary, review institutional improvement measures."