After President Lee Jae-myung (이재명) criticised the collection of long-overdue debt by private bad-loan processor Sangnoksu First Securitisation SPC Co. as “primitive predatory finance”, financial firms are rolling out plans to sell the debt.

On May 12, Lee said at a Cabinet meeting and on social media, “(Sangnoksu) is primitive predatory finance that tightens the noose on ordinary people.” He ordered officials to “review solutions through legislation if necessary.”

Financial firms then moved straight away to clean up the debt. Financial companies that are shareholders in Sangnoksu decided to sell long-overdue debt they hold to the Korea Asset Management Corp’s Saedo-yak fund.

Shinhan Card first announced a sale plan earlier in the day. A Shinhan Card official said, “We are sorry we failed to consider sooner the situation of borrowers facing financial difficulties.” The official added, “We decided to sell all of the receivables on the judgement that we can no longer delay. We will actively practise the value of inclusive finance.”

At a press briefing held on the day, IBK Industrial Bank of Korea President Min-young Jang (장민영) said, “Only the stake remains and there is no balance. There is no reason to keep holding it.” She added, “We will resolve it swiftly.”

KB Kookmin Bank said it decided to sell all long-overdue debt corresponding to its stake to the Saedo-yak fund. KB Kookmin Card has no separate remaining receivables, but agreed to the debt sale as a shareholder.

A KB Kookmin Bank official said, “We take seriously the fact that long-overdue debtors have been left in a financial blind spot.” The official added, “We will fulfil the bank’s social responsibility.”

Sangnoksu’s shareholders include Shinhan Card with 30 percent, Hana Bank, IBK Industrial Bank of Korea and Woori Card with 10 percent each, and KB Kookmin Bank and KB Kookmin Card with 5.3 percent and 4.7 percent, respectively. The remainder is held by three loan companies with 10 percent each.

Financial Services Commission Chairman Eok-won Lee (이억원) said at the Cabinet meeting, “We are encouraging participation in the Saedo-yak fund through voluntary agreements with financial institutions.” He added, “We will consider separately contacting shareholders and seeking their consent.”