KAMCO Prepares Repayment Assessment for Loans Acquired from Sangnoksoo

Debt Forgiveness or Reduction to Be Determined After Repayment Capacity Assessment
KAMCO and Financial Authorities to Review Blind Spots in Long-term Delinquent Loan Market
Investigation Expands to Private Bad Banks Including KB Star

Korea Asset Management Corporation (KAMCO) has begun preparing to assess the repayment capacity of long-term delinquent loans it will acquire from the private bad bank ‘Sangnoksoo’. Rather than simply writing off all long-term delinquent loans in bulk, KAMCO plans to determine the level of debt restructuring based on each debtor’s current ability to repay.

On October 1, 2025, the "New Leap Fund Launch Ceremony" was held at the Press Center in Jung-gu, Seoul. Key guests, including Eogwon Lee, Chairman of the Financial Services Commission (fourth from the right), participated in the plaque ceremony. 2025.10.01 Photo by Dongju Yoon

According to the financial sector on May 14, KAMCO is preparing procedures to assess the repayment capacity of each debtor for long-term delinquent loans to be transferred from Sangnoksoo. Once the loans currently held by Sangnoksoo are transferred to the New Leap Fund, KAMCO is expected to immediately begin reviewing cases for debt restructuring. As the liquidation of Sangnoksoo progresses in earnest, it is expected that much of the collection pressure faced by long-term delinquent borrowers will be alleviated.

However, not all delinquent loans transferred to the New Leap Fund will be fully written off. The extent of adjustment will vary depending on each debtor’s income and circumstances. According to the New Leap Fund’s evaluation criteria, only those deemed to have virtually no repayment capacity will be eligible for complete debt write-off. In contrast, those with some assets or remaining repayment ability will have 30 to 80 percent of the principal reduced, while the remainder will be structured for long-term installment repayments.

Previously, financial institutions agreed to transfer approximately KRW 493 billion in long-term delinquent loans held by Sangnoksoo, a private distressed asset management company, to KAMCO’s New Leap Fund. Sangnoksoo, a special purpose company (SPC) established in 2003 by major banks and credit card companies following the credit card crisis, has managed and collected long-term delinquent loans for over 20 years. Recently, President Lee Jaemyung publicly criticized Sangnoksoo’s prolonged collection practices as “primitive predatory finance,” which has accelerated the disposal of distressed assets within the financial sector.

KAMCO, together with financial authorities, has been conducting a comprehensive review of the long-term delinquent loan market beyond Sangnoksoo. A high-ranking government official explained, “Even before the issue gained public attention through media reports, we conducted a thorough investigation into the blind spots in the long-term delinquent loan market, including the Sangnoksoo case. In that process, the Sangnoksoo situation came to light, and considering the scale identified so far, there do not appear to be many cases larger than Sangnoksoo.”

Financial authorities and KAMCO are also in discussions with the investors of another private bad bank, KB Star Asset Securitization Co., Ltd. (KB Star), to have its delinquent loans sold to the New Leap Fund. KB Star has managed personal credit loans from KB Kookmin Bank that have been delinquent for over 10 years since 2020, and as of now, holds approximately KRW 500 billion in principal of such loans.

This content was produced with the assistance of AI translation services.