Card issuers wary of government's bad bank plan amid rising delinquency rates

Credit card issuers are voicing concerns that the government’s debt relief program, called the bad bank initiative, could further weigh on their profitability as they are already facing higher credit costs due to rising delinquency rates, industry officials said Tuesday. But some in the industry say the plan could aid in clearing nonperforming loans, depending on the cost-sharing arrangements. The state-run Korea Asset Management Corp. is moving forward with plans to set up a bad bank worth 800 billion won ($576 million), aimed at restructuring debt for financially vulnerable individuals. A bad bank is an entity that purchases nonperforming assets or loans at a discounted rate to facilitate their resolution. This initiative focuses on individuals holding unsecured debts of up to 50 million won that have been delinquent for over seven years. Half of the 800 billion won funding — 400 billion won — is expected to come from contributions by financial institutions. The government initially planned for banks to shoulder the full 400 billion won, but later expanded the burden to include seWeiter zum vollständigen Artikel bei Korea Times Weiter zum vollständigen Artikel bei Korea Times