Last year, the fisheries cooperative recorded a deficit of 272.5 billion won and has begun restructuring failing cooperatives. Of the 89 unit cooperatives, half, or 43, reported net losses.
According to the financial sector on the 14th, the fisheries cooperative is selecting an accounting firm to evaluate the liabilities and assets of its national cooperatives and designate failing cooperatives. Once the firm is selected, the cooperative will conduct a comprehensive asset audit over three months.
Through the audit, the cooperative plans to eliminate cooperatives with a net capital ratio (capital/total assets) of less than 2% and will assess the viability for recovery based on the results. A net capital ratio of 2% is the minimum capital standard for the fisheries cooperative's unit cooperatives. It is reported that the cooperative will also proceed with mergers and consolidations of failing cooperatives based on the evaluation results.
The reason the fisheries cooperative has initiated cooperative restructuring is due to accumulated losses. The cooperative recorded a deficit of 275.2 billion won last year, which is approximately 4.7 times higher than the previous year's deficit of 57.5 billion won. The institutional sector, which reported a profit of 84.1 billion won in 2023, noted a deficit of 141.8 billion won last year.
Failing cooperatives are also increasing. Last year, 43 out of 89 unit cooperatives recorded net losses. As of today, among the 67 cooperatives that made management disclosures, 7 received a grade 4 (weak) in the management performance evaluation. The management failure assessment is divided into grades 1 to 5, where grades 4 to 5 may receive recommendations or requirements to improve financial conditions. Some cooperatives have fallen into a capital impairment state with their net capital ratio dropping below 0%.
Forecasts suggest that restructuring in the mutual finance sector will intensify, starting with the fisheries cooperative. Last year, the Saemaul Geumgo recorded a net loss of 1.7382 trillion won, and the credit cooperative recorded a net loss of 341.9 billion won. So far, 7 Saemaul Geumgos have closed in the first quarter of this year, and the credit cooperative recently merged the Alchan Credit Cooperative and the Yeongju Jangsu Credit Cooperative in the Yeongju area.
Financial authorities plan to reorganize various capital regulations for the mutual finance sector based on the principle of 'same work - same regulation.'
A mutual finance official said, 'Many expect that the next restructuring target after savings banks will be the mutual finance sector,' adding, 'It seems that proactive restructuring will occur in each sector.'