The building and land of Wonhyo Saemaeul Credit Union's headquarters, located a 3-minute walk from Hyochang Park Station on Subway Line 6, were sold for 9.1 billion won in December of last year. This marks the first time in 35 years since the credit union completed its ownership preservation registration in 1989 and began operations. Wonhyo Saemaeul Credit Union has since rented the building under a lease for 1 billion won, continuing its operations at the same location.
The reason Wonhyo Saemaeul Credit Union sold its commercial real estate in Yongsan is due to deteriorating soundness. At the end of last year, the credit union received a rating of 4 (weak) in a management performance evaluation and was subject to management improvement measures. The ratio of non-performing loans (NPL), classified as bad assets, surged from 10.27% (21.5 billion won) at the end of 2023 to 16.34% (32.8 billion won) at the end of last year. This figure far exceeds the financial authorities' recommended limit of 'below 8%.'
Local Saemaeul Credit Unions are working hard to normalize by selling their real estate. As profitability and soundness deteriorated due to non-performing loans in real estate project financing (PF), they are putting their assets on the market to improve their financial structure.
According to the financial sector on the 24th, Gangbuk Saemaeul Credit Union has decided to sell a three-story building in Suyu-dong's Beon 1-dong branch for 5.1 billion won. This marks 19 years since Gangbuk Saemaeul Credit Union purchased the building for 1.46 billion won in 2006. The building is a 6-minute walk from Suyu Station on Subway Line 4, and is home to not only the credit union but also an internet cafe and a church. As of the end of last year, Gangbuk Saemaeul Credit Union received a management performance evaluation rating of 3 (normal), but its non-performing loan ratio increased from 2.08% (1.44 billion won) at the end of 2023 to 8.02% (6.36 billion won) at the end of last year.
Geumho Saemaeul Credit Union has decided to sell an entire four-story building located at exit 5 of Shinkumho Station on Subway Line 5. The price is reported to be between 4.2 billion and 3.9 billion won. This building houses Geumho Saemaeul Credit Union's automated teller machine (ATM) among other facilities. Geumho Saemaeul Credit Union's non-performing loan ratio also jumped from 6.95% (1.8 billion won) at the end of 2023 to 14.79% (3.69 billion won) at the end of last year.
The sale of real estate owned by Saemaeul Credit Unions is interpreted as a measure to resolve the deteriorated soundness due to the failure of real estate project financing loans. According to the Ministry of the Interior and Safety, the non-performing loan ratio for about 1,200 Saemaeul Credit Unions nationwide was 9.25% last year. Increased provisions for bad debts due to failures in real estate project financing led to record losses for Saemaeul Credit Unions, which hit 1.7 trillion won.
It is reported that sales of not only commercial real estate but also non-commercial real estate by Saemaeul Credit Unions are increasing. When financial consumers fail to repay their debts, the credit union auctions or liquidates the real estate held as collateral to recover loans. However, due to the recession in the real estate market, there have been many cases of unsold properties, leading Saemaeul Credit Unions to bid on properties and subsequently sell them at public auction.
A representative from Saemaeul Credit Union said, 'For cost reduction among others, we sometimes sell properties used for business and then lease them back.' In the case of non-business real estate, the credit union puts properties for which it remains as the creditor up for public auction, and if they are unsold, the credit union accepts them into its inventory and aims to sell them within a year.