📌 Today's term: Bad Bank
A bad bank is a special-purpose institution that separates and buys up a financial company's non-performing assets (bad loans), then manages, resolves and disposes of them professionally. It is usually led by the government or a public body, and the ordinary bank remains a "good bank" that can focus on sound assets. The aim is to restore the soundness of financial companies' assets and keep instability from spreading across the economy (kihoilbo.co.kr).
📰 The latest bad bank news as of June 10, 2025
1. Financial Services Commission to let nonprofits buy personal debt: "a signal flare for a bad bank"
- The Financial Services Commission is pursuing a revision of supervisory rules that would allow nonprofit corporations to buy non-performing personal loans.
- This signals that a private bad bank model could re-emerge, like the "Jubilee Bank" President Lee Jae-myung ran in Seongnam in the past (alphabiz.co.kr, ttlnews.com).
2. "Possible forgiveness of 50 trillion won in COVID debt… a race to set up a bad bank"
- With 47.4 trillion won in COVID-era policy loans nearing maturity, the government is hurrying to set up a bad bank to forgive the debts of vulnerable borrowers.
- Plans include a dedicated unit under KAMCO (Korea Asset Management Corporation) and 500 billion won in the supplementary budget (m.kukinews.com, mk.co.kr).
3. "The bad bank, a 'hot potato'… banks also prepare win-win finance"
- Against a backdrop of rising delinquency rates (spreading problems among the self-employed and in real estate project financing), the whole financial sector is focusing on how urgently a bad bank is needed.
- Analysts say "the dedicated body for resolving non-performing assets, slated to launch within the year, will be a watershed for financial stability" (biz.newdaily.co.kr).
🔗 Related articles
- FSC lets nonprofits buy personal debt, laying the groundwork for a bad bank (alphabiz.co.kr)
- Lee Jae-myung's "Jubilee Bank" restarts: a signal flare for a bad bank? (ttlnews.com)
- Will 50 trillion won in COVID debt be forgiven? Bad bank talks gain momentum (m.kukinews.com)
- The bad bank "hot potato": will banks open their win-win finance packages? (greened.kr)
✍️ Closing thoughts
This bad bank discussion is not just a financial policy. It carries two goals at once: easing post-COVID financial imbalances and protecting ordinary households and small business owners.
In particular, if private nonprofit corporations are allowed to take part, expectations are growing that a variety of policy experiments will become possible, much like a revival of the old "Jubilee Bank."
Now is the time to watch closely whether the supplementary budget is finalized, how KAMCO's dedicated unit is put into practice, and whether debts are actually bought and written off.