Finance Minister to call for setup of "bad bank"

Minister of Finance and Economy Jin Nyum asserted August 27 that a bad bank (a professional asset management company for the distressed assets of financial institutions) is needed to care for the distressed assets of banks that have been injected with public funds. Finance and Economy Minister Jin revealed his plan to revitalize the banks by transferring their distressed assets to the bad bank and weaving them into a financial holding company. Appearing on a TV program titled ¡°Sunday Diagnosis¡± on Korea Broadcasting Company, Minister Jin stated this after emphasizing that some super banks are preparing on their own for the implementation of a financial holding company system, but the core problem at hand is the treatment of distressed assets for banks that have been injected with public funds.

An official of the Ministry of Finance and Economy explained that what the minister is implying is that although Korea Asset Management Company (KAMCO) is currently acting as a bad bank for the government, an additional bad bank established by the financial industry at a private level may be possible and necessary. Minster Jin also asserted on the TV program that the Korean economy will make a soft landing by the first half of next year to record an economic growth of 5 ~ 6% judging from current macroeconomic indexes. As for the problem associated with the retirement of former Hyundai Group honorary chairman Chung Ju-Yung¡¯s three sons, the minister stated that it was not appropriate for the government to intervene in the matter. He added that the problem will be worked out as the treatment of former chairman Chung¡¯s three sons has already been agreed upon between the Hyundai Group and its creditors.