KAMCO accused of pressuring firms into New Leap Fund

Apr 10, 2026, 09:13 am

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Launch ceremony of the New Leap Fund (also known as the Sae-Do-Yak Fund) held in October last year. / Yonhap News

Korea Asset Management Corporation (KAMCO), which operates the government’s “New Leap Fund” bad bank program—also known as the Sae-Do-Yak Fund in Korean—has been accused of pressuring financial firms to join the initiative by warning of potential regulatory disadvantages, according to industry sources.

A financial firm, identified as Company A, said KAMCO officials warned that refusal to participate would be reported to the Financial Services Commission (FSC), potentially leading to administrative penalties.

The New Leap Fund was launched in October under President Lee Jae-myung as a bad bank program designed to purchase and write off non-performing loans to support financially distressed borrowers and promote economic recovery.

However, participation has remained sluggish. Data released by KAMCO in January showed that the fund had acquired 7.7 trillion won ($5.7 billion) in debt, far below its 16.4 trillion won target. Only 34 out of 440 eligible firms—about 7%—have joined the program.

Industry officials claim that the low participation rate led KAMCO to intensify pressure on firms. What initially began as voluntary proposals reportedly escalated into coercive tactics when companies refused to join, citing concerns over profitability and potential job losses.

One industry source said, “The government does not compensate for losses, so companies have no choice but to consider their own interests. Yet KAMCO targeted firms with even minimal financial ties and exploited their weaker position.”

There are also allegations that KAMCO urged firms to sell certain debt assets—such as loans under 50 million won that have been delinquent for more than seven years—even when those assets could still generate returns. Critics argue this contradicts the program’s original purpose.

Legal experts say such actions could constitute abuse of authority or coercion. “Pressuring firms into actions they are not legally obligated to take could fall under abuse of power or coercion under criminal law,” a lawyer said.

Calls are growing for stronger oversight by the FSC. The regulator had previously stated that participation in the fund would be voluntary and did not mention any penalties for non-participation.

Affected firms are reportedly collecting evidence and preparing to file criminal complaints against KAMCO.

KAMCO did not respond to requests for comment. The FSC also declined to provide an official response.

#New Leap Fund #Sae-Do-Yak Fund #KAMCO #Financial Services Commission #bad bank