NPS plans to use W300b more to buy bad debts

Korea’s national pension fund plans to spend 300 billion won ($267.3 million) down the road in order to take over bad debts from distressed commercial banks, the fund’s top manager said Monday.

“The National Pension Service has recently decided to invest an additional 300 billion won in funds to buy non-performing loans as part of our alternative investment expansion,” Chairman Jun Kwang-woo said in an interview with Yonhap News Agency.

The latest decision followed on the heels of its 600 billion won investment in October 2009, used to buy up distressed loans for the first time.

Two bad-debt investors ― Pine Tree Investment & Management Co. and a consortium between Woori F&I Co. and Eugene Asset Management Co. ― will manage the 300 billion won new funds to take over banks’ non-performing loans for the NPS, the chairman said. 

The decision came as local banks saw non-performing loans soar to 2.32 percent of their total lending as of the end of September after the global financial crisis crippled repayment of loan borrowers.

Chairman Jun also noted the fund will expand its overseas and alternative investment as part of its portfolio diversification moves.

The NPS announced last year its plan to raise the proportion of overseas investment up to 20 percent of its total assets under management by 2015, from 12.4 percent as of end-November.

The fund has 383.6 trillion won assets under its management as of the end of 2010, standing as the world’s fourth-largest pension fund manager. (Yonhap News)