Saemaeul Geumgo Embarks on Radical Reform... Leader to Be Elected Next Month

Management Innovation Advisory Committee Unveils Innovation Plan
All-Out Effort to Revamp Image Amid Bank Run Crisis
Deposit Balances Gradually Recovering

Kim Seong-ryeol, Chairman of the Saemaeul Geumgo Management Innovation Advisory Committee, is holding a joint briefing on the Saemaeul Geumgo management innovation plan on the 14th at the Government Seoul Office in Jongno-gu, Seoul, together with Choi Byung-kwan, Director General of Local Finance and Economy at the Ministry of the Interior and Safety, and Shin Jin-chang, Director of the Financial Industry Bureau at the Financial Services Commission. Photo by Jo Yong-jun jun21@

SaeMaeul Geumgo, which was once accused of corruption and faced a bank run crisis, has embarked on a complete transformation. It unveiled a management innovation plan centered on introducing a professional management system, and a new central chairman election is scheduled for next month. As SaeMaeul Geumgo is making every effort to revamp its image, its deposit balance is gradually recovering.

According to the Bank of Korea statistics system on the 15th, SaeMaeul Geumgo's deposit balance as of the end of September was 246.0546 trillion KRW. This is an increase of 2.3351 trillion KRW compared to the previous month. Compared to the end of July, when the deposit balance sharply declined (241.8559 trillion KRW), it increased by 4.1987 trillion KRW. After experiencing a bank run crisis in July, SaeMaeul Geumgo underwent a major overhaul, including the dispatch of financial authorities and the launch of a management innovation advisory committee, and is gradually recovering. The day before, the Management Innovation Advisory Committee revealed an innovation plan after more than 100 meetings, signaling a major change.

According to SaeMaeul Geumgo's management innovation plan, the first step is to decentralize the authority concentrated in the central chairman. The positions of executive director and supervisory director will be abolished, and a new position called 'CEO' will be established to oversee overall operations, introducing a professional management system. The CEO will be appointed through recommendations from a personnel recommendation committee composed of external experts, with a two-year term that can be extended once within two years through board approval.

The central chairman's term will change from the current renewable system to a single four-year term, limiting duties to external activities and chairing the board of directors. Measures to restrict the reappointment of individual branch chairpersons, who have been criticized as "small kingdoms," are also being pursued. Currently, branch chairpersons serve four-year terms and can be reappointed twice, allowing up to 12 years in office, but many have extended their terms through various loopholes. A legislative amendment to prevent this is under consideration.

SaeMaeul Geumgo's soundness and risk management will also be strengthened. Provisions for loan loss reserves will be increased, and liquidity ratios and loan-to-deposit ratios will be improved to align with other mutual financial institutions. Joint loans exceeding 20 billion KRW will require central association participation, and sectoral loan limits for real estate and construction industries will be tightened to 30% each, with a combined limit of 50%.

Regarding supervisory authority, cooperation with the Financial Supervisory Service (FSS) will be enhanced. Unlike other mutual financial institutions directly supervised by the FSS, SaeMaeul Geumgo has only been subject to joint audits with the FSS upon requests from the Ministry of the Interior and Safety, leading to criticism of inadequate oversight. The role of the FSS, which has been limited to some soundness inspections during government joint audits, will be significantly strengthened, ensuring practical inspection participation through a consultative body composed of the Ministry of the Interior and Safety, FSS, and the Korea Deposit Insurance Corporation. Choi Byung-kwan, Director of the Local Finance and Economy Office at the Ministry of the Interior and Safety, explained, "It was agreed to first implement the innovation plan, and the transfer of supervisory authority will require further discussions with the National Assembly and related ministries."

For severely insolvent branches, such as those with complete capital erosion, restructuring will be conducted, with mergers expected to be completed by the first quarter of next year. However, even in mergers, all customer deposits, savings, and equity contributions will be fully guaranteed. Kim Seong-ryeol, Chairman of SaeMaeul Geumgo's Management Innovation Advisory Committee, stated, "The insolvent branches will complete merger work by the first quarter of next year through a fast-track process, and other branches of concern will be re-evaluated after management guidance such as management performance evaluations."

The SaeMaeul Geumgo Central Association is also preparing for a new leadership. Following the resignation of Park Cha-hoon, the central chairman who is currently on trial for bribery charges, a by-election is planned for the 21st of next month. This by-election will be a direct election where the chairpersons of 1,291 SaeMaeul Geumgo branches will directly elect the central chairman. Previously, the central chairman was elected through an indirect election by about 350 delegates. Current candidates mentioned include Kim In, the acting chairman and vice president, Kim Hyun-soo and Park Soo-yong, regional directors of the central association, Song Ho-seon, CEO of MG Credit Information, and Choi Cheon-man, former head of the SaeMaeul Geumgo Welfare Association.

This content was produced with the assistance of AI translation services.