[2020 National Audit] KAMCO Finds 11 Trillion Won in Assets of Delinquent Debtors but Recovery Rate Only 0.7%

"24 Cases of Lost Recall Opportunities Due to Inadequate Legal Action"

[Asia Economy Reporter Park Sun-mi] Korea Asset Management Corporation (KAMCO) has discovered assets worth approximately 11 trillion won from debtors of non-performing loans it purchased over the past five years, but the actual recovery rate has been revealed to be only 0.7%.

According to data submitted by KAMCO to Song Jae-ho, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, from 2016 to 2019, the amount of assets such as buildings, land, and automobiles found from debtors of non-performing loans purchased by KAMCO reached about 10.866 trillion won. However, as of August this year, the amount recovered through compulsory execution was only 70.7 billion won, resulting in a recovery rate of just 0.7%.

During the same period, the debt amount that debtors with discovered assets had to repay was 13.6509 trillion won. When comparing the ratio of discovered assets to debt amount, it was 79.6%, indicating that, arithmetically, about 80% of the debt could be repaid.

Looking at the discovered assets by year, in 2016, 73,530 cases were found, with assets worth approximately 9.426 trillion won, the highest amount. However, the actual recoveries through compulsory execution that year were only 2,538 cases, amounting to 18.1 billion won. Assets continued to be discovered every year thereafter. In 2017, assets worth about 745 billion won were found in 52,201 cases, and in 2018, assets worth about 396 billion won were found in 96,442 cases.

Last year, the highest number of assets was discovered with 211,950 cases, and the asset value reached about 299 billion won. This was influenced by KAMCO's purchase of a large volume of bonds, totaling 1.12 million cases, in 2018.

On the other hand, KAMCO's recovery situation has continued to be poor. In 2017, only 3,684 cases amounting to 19.3 billion won were recovered. In 2018, 2,720 cases amounting to 17 billion won were recovered, and last year, 1,731 cases amounting to 11.5 billion won were recovered, showing a decreasing recovery scale year by year. For this year, as of August, the number of cases where debt recovery was made from previously discovered assets was 684 cases, amounting to about 4.7 billion won, and it is expected that the recovery amount will be even lower than last year.

Assemblyman Song views the seriously low recovery results of KAMCO as due to very insufficient conditions for securing recovery benefits. Song said, "KAMCO has expressed its intention to actively participate in compulsory execution for discovered assets in the future to maximize recovery benefits, but there is no appropriate measure to guarantee this," adding, "It is necessary to consider reasonable systems or devices to practically enhance KAMCO's recovery capability."

He also emphasized, "The fact that KAMCO recorded a recovery rate of less than 1% despite confirmed recoverable assets and sometimes missed recovery opportunities due to negligence in legal measures shows how complacent they were," and stressed, "More meticulous response management is required to ensure that recovery opportunities do not disappear."