The Financial Reconstruction Commission on Wednesday gave a banking license to the Housing Loan Administration Corp. so that it can expand operations to recover bad loans in the banking sector.
The government-backed HLAC, set up in 1996 to collect debts left by defunct nonbank home lenders, is to merge with the Resolution and Collection Bank on April 1.
The HLAC needed a banking license to inherit RCB's assets and liabilities before the licensed bank legally discontinues operations. It was established in 1995 to collect debts from failed credit unions.
The merger plan was decided in October to expedite the recovery of bad loans. The new bank -- which will essentially be a Japanese version of the U.S. Resolution Trust Corp. -- will buy such bad loans as those held by the nationalized Long-Term Credit Bank of Japan and try to recover them.