Financial Supervisory Service Governor Lee Chan-jin said the bad-loan ratio at the Korean Federation of Community Credit Cooperatives (KFCC) is serious, noting it is "a situation where one-third of the cooperatives need to be merged or closed."
Lee, at the comprehensive audit by the National Policy Committee on the 27th, answered a point raised by Democratic Party of Korea lawmaker Heo Yeong that "the Korean Federation of Community Credit Cooperatives (KFCC) has a high bad-loan ratio but is not properly disclosing it," and said, "If consolidation is delayed, there is a serious risk of it spreading into a system risk."
Heo said, "The Korean Federation of Community Credit Cooperatives (KFCC) has more than 3,200 branches nationwide and over 23 million customers. It is clearly a financial institution, with credit business accounting for 92%," adding, "The ratio of substandard-and-below loans at the Korean Federation of Community Credit Cooperatives (KFCC), that is, the bad-loan ratio, is the highest in the financial sector, but it is not being properly disclosed."
Lee said, "The Korean Federation of Community Credit Cooperatives (KFCC) issue has been a continuous point of concern and is extremely serious," and argued that the supervisory authority over the Korean Federation of Community Credit Cooperatives (KFCC) held by the Ministry of the Interior and Safety needs to be transferred. Lee said, "The Financial Supervisory Service (FSS)'s supervisory authority over mutual finance institutions is limited to credit business, but considering issues related to moral hazard at the central federation and others, I fully agree with unifying the supervisory authority." Lee added, "This, too, is an issue that requires consultation with the relevant ministries."
Financial Services Commission (FSC) Chairman Lee Eog-weon said in this regard, "We are reviewing various matters through an institutional-improvement task force (TF)."