South Korea’s state-run deposit insurer opened its first overseas branch in Phnom Penh yesterday in a move to sell off the bank and property assets of Korean banks that went belly up in 2011.

The Korean Deposit Insurance Corporation (KDIC) has identified 10 local projects with a total value of $420 million – an amount that represents nearly 78.5 percent of all overseas assets managed by the institution.

Gwak Bumgook, president and CEO of KDIC, said the branch office would help facilitate the offloading of assets by having a dedicated presence in Cambodia that could help speed up the sales process by working directly with potential investors.

“Previously, a major portion of our resources were used to outsource sales and collection capabilities and this wasn’t the best way to work with potential investors,” he said.

Gwak added that operating from abroad and frequently parachuting staff into Cambodia did not provide the consistent and constant connect needed to sell properties and stakes of financial institutions.

“We made the decision to set up a branch because we felt that it was the right time and that we needed to work more closely with local partners to get on the ground info,” he said.

“Before it was not easy to work with stakeholders and understand the Cambodian market, or to work with representatives from the government.”

The KDIC branch has been tasked with selling five assets held by the bankrupt Busan Mutual Savings Bank, most notably Camko Specialised Bank, but also investments into a failed highway development project, another real estate development and the license and land of an airport concession contract.

Both the real estate development and the highway development project face legal hurdles in Singaporean, Cambodian and South Korean courts.

In addition to Busan’s assets, the branch is looking to sell two assets held by Tomato Specialised Bank, one by Prime Savings Bank and one by Shinhan Khmer Bank.

Gwak said selling Camko Specialised Bank was the highest priority, with Apro Financial Group the preferred bidder. However, the sale would not be finalised until Camko settled a court case in Cambodia that involved a loan-taker that filed a lawsuit over seized property.

“We have the purchase agreement signed and agreed upon by the National Bank of Cambodia, but we first need to take care of the third party lawsuit before it gets final approval,” he said. “Once it is settled, Apro will buy it.”

So far, KDIC has recovered a little over $15 million from the Cambodian assets of defunct Korean institutions.

“For the sale of assets, we are not just looking at Korean buyers despite our extensive network, but also any interested buyer,” Gwak said.

He added that while there has been no concrete movement in off-loading the problematic Gold Tower 42 project in Phnom Penh, the Cambodian government was pushing the KDIC to facilitate a deal and find a buyer.

“The problem with finding a buyer is that the project is of such a big size, but it has potential with being located in the heart of the city and being pretty much structurally complete,” he said.