On the Asian Development Bank's initiative to create an electronic platform for cross-border transactions on non-performing assets (NPLs) for the Asia-Pacific region
Prerequisites
Amid growing risks of global economic instability, rising non-performing assets (NPLs) threaten the stability of banking and financial systems across Asia.
However, a well-functioning NPL trading system can play a key role in mitigating these risks by improving the market mechanisms for NPL transactions and mobilizing private capital, which will allow banks to relieve their balance sheets of the burden of non-performing debt and redirect the freed-up liquidity to lending to businesses and individuals.
To this end, the Asian Development Bank (ADB), together with IPAF1 members, is implementing an initiative to strengthen NPL markets in Asia by creating an online NPL trading platform.
The project's goal is to create a liquid and transparent regional market for distressed assets by bringing together institutions from Asian countries.
About the project
In 2019, during the IPAF Summit and International Conference, the organizer, Korea Asset Management Corporation (KAMCO), proposed developing a concept for a unified digital platform for NPL trading to facilitate the development of the Asian distressed asset market.
This initiative was supported by the IPAF Secretariat at the ADB, and in 2020, the Concept for the Development and Use of Cross-Border Online Platforms for Trading Distressed Assets in the Asian NPL Market was presented.
This Concept envisioned the creation of a standardized electronic trading platform for IPAF members to trade both non-performing loan claims and real estate collateral.
To study the readiness of Asian markets to integrate their distressed assets into economic circulation through a single digital platform, the IPAF Secretariat also initiated the creation of a Committee to Study the Development of a Single Digital Platform for NPL Implementation, which included a number of IPAF members.
During the corresponding study, the ADB identified the reluctance of several countries to participate in the creation of a single digital space for trading distressed assets due to the lack of an adequate legal environment in developing countries in the region, issues related to data quality and valuation standards, and other factors.
Therefore, based on the results of the study, the ADB concluded that, in the near term, modular, country-specific platforms are considered the most realistic and pragmatic solution.
ADB is also considering integrating local trading platforms into its centralized hub in the future.
In 2024, the next phase of ADB's project to develop a trading platform concept was launched, simulating trading in distressed assets between selected IPAF members. This study will simulate cross-border NPL trading in a virtual environment, through virtual (test) trades between two or three IPAF member countries.
In October 2024, IPAF members expressing interest in actively participating in this pilot were identified: ZSAMC (China), DATC (Vietnam), and KAMCO (Korea).
This will allow IPAF members to explore and understand the potential challenges associated with integrating two or three NPL markets or trading platforms.
The focus will be on mitigating key implementation risks identified during the testing phase, thereby ensuring a smoother transition to a fully functioning platform. Based on the results of the NPL test trading simulation, in-depth studies will be conducted on key aspects such as legal and regulatory issues, foreign exchange management, technical aspects related to settlements, depositories, and other issues.
The study aims to achieve the following results:
− Determining the optimal platform structure;
− Determining the most appropriate governance, ownership, and operational structure model for the platform through a comparative analysis of various possible options.
International workshop in Hanoi and definition of the architecture of the future platform
To coordinate practical approaches for creating a cross-border online platform, KAMCO will host a hybrid (i.e., with both in-person and online participation) seminar, "Creating an Online Platform for Trading Non-Performing Assets (NPL): From Concept to Pilot Project," on November 20-21, 2025, in Hanoi, Vietnam.
Representatives of state-owned asset management companies from China, Korea, Vietnam, and Kazakhstan, as well as observers from Mongolia and Ukraine, will participate in the seminar. Representatives of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market (ARFMM) have also been invited to represent Kazakhstan.
The event will cover:
- the platform development process, from providing investors with access to information to transitioning to full-fledged online transactions;
- designing a key user interface;
- requirements for IT infrastructure and capital expenditures, including the possible use of IDC hosting services;
- functions that can be enhanced by artificial intelligence (e.g., NPL assessment modules and analytical tools).
Practical parameters will also be discussed, including the categories of NPLs covered, the platform's geographic scope, and its ownership and governance structure. Participants will also examine relevant successful cases—the online NPL trading platform Taobao (China), OnBid (Korea), ProZorro (Ukraine), and the AsianBondsOnline (ABO) platform from the ADB—to identify approaches applicable to the region.
The workshop will conclude with the development of a preliminary roadmap for the platform's development and the identification of further steps for project implementation in 2026.
The Fund's participation in the workshop will allow participants to explore best regional practices and contribute to strengthening the Fund's international cooperation.
Potential for Kazakhstan and the Fund's role in developing a regional platform
Taking into account:
• the 10th IPAF Summit and International Conference planned to be held jointly by the Fund and the ADB in Kazakhstan in 2026, which will be attended not only by IPAF member organizations but also by leading global experts in distressed asset management from research institutes and the private sector;
• the interest of IPAF members from China and Korea in closer potential cooperation with Kazakhstan, including through the implementation of joint investment projects;
• active measures currently being taken by the financial regulator to develop a secondary market for distressed assets in Kazakhstan;
The Fund is exploring the possibility of collaborating with the ADB on the development and potential launch of a pan-Asian transaction platform in Kazakhstan, involving the ARFMU, banks, and their subsidiaries managing distressed assets.
This is particularly relevant given the new legislative environment that limits the time NPLs can remain on banks' balance sheets.
The creation of such a platform is expected to significantly expand channels for disposing of distressed assets, overcome geographic barriers, facilitate the development of an active, liquid, and efficient secondary NPL market, and could also provide impetus for Kazakhstan not only in developing the domestic distressed asset market but also in increasing foreign investment inflows.
Compliance with state priorities
In accordance with the objectives of the Concept for the Development of the Financial Sector until 2030, the development of market mechanisms for the sale of distressed assets with the involvement of private investors is a key element in the recovery of the banking sector and the reduction of the likelihood of a further increase in distressed assets in the future.
Given the government's position on the need to minimize direct participation in the purchase of distressed bank assets, as well as current legislative amendments aimed at developing the distressed asset market, it seems logical to expand the channels for integrating distressed assets into economic circulation.
At the same time, the Fund, as an organization with 100% state participation, enjoys the trust of international financial institutions and foreign state-owned companies managing distressed assets. This, along with the development of international cooperation, can ensure risk sharing, helping to reduce government involvement in financing the recovery of the financial sector.
Material prepared by:
Aitkhankyzy Sagynysh, International Cooperation and Analytics Department, Department of Corporate Development and Coordination of Activities, “Fund of Problem Loans” JSC.
