The Ministry of the Interior and Safety and the Financial Services Commission are reviewing a plan to extend to the end of the year the joint task force (TF) launched to improve the soundness of the Korean Federation of Community Credit Cooperatives (KFCC). They judge that the TF is accelerating the recovery of the KFCC's soundness, so they plan to extend its operation and push additional measures to strengthen stability.
On the 13th, according to the financial authorities and others, the Ministry of the Interior and Safety (MOIS) and the Financial Services Commission (FSC) are discussing whether to extend the "KFCC special management TF." The MOIS and the Financial Services Commission are reportedly proceeding with discussions to operate the TF through the end of this year.
Originally, the TF's operating period was from December last year to the end of last month. The MOIS, the Financial Services Commission (FSC), the Financial Supervisory Service, and the Korea Deposit Insurance Corporation (KDIC) are participating in the TF. They checked the soundness status of 35 KFCC branches nationwide in the first half of this year.
Recently, the deterioration in the KFCC's soundness has continued, but key indicators are gradually improving. Last year, the KFCC posted a net loss of 1.2658 trillion won, with the loss narrowing by 476.5 billion won from the previous year. As of the end of last year, the delinquency rate was 5.08%, down 1.73 percentage points from the end of the previous year. This year as well, the KFCC's deficit is reportedly improving. In response, the Ministry of the Interior and Safety (MOIS) and the Financial Services Commission (FSC) are considering extending the TF period to improve soundness by a wider margin.
Earlier, during the real estate boom from 2020 to 2022, the KFCC sharply increased corporate lending centered on real estate project financing (PF), but as the market slumped, related arrears began to rise and soundness worsened. The KFCC's delinquency rate was around 2% through 2021, but as of the first half of last year it surged to 8.37%.
In response, the government has moved into high-intensity oversight this year, including operating the TF. An official at the Ministry of the Interior and Safety (MOIS) said, "We are discussing an extension plan for the TF with the financial authorities, and a conclusion is expected soon."