Shortened Submission and Implementation Period for 'Poor' Saemaeul Geumgo Management Improvement... Strengthening Soundness Management

Ministry of the Interior and Safety Revises Saemaeul Geumgo Supervision Standards
Administrative Notice Until the 29th... Collecting Opinions

The Ministry of the Interior and Safety has decided to strengthen the soundness management of Saemaeul Geumgo to the level of other mutual finance industries by shortening the submission deadline and implementation period for management improvement plans of insolvent Saemaeul Geumgo.

On the 8th, the Ministry announced that it will hold an administrative notice from the 9th to the 29th regarding the partial amendment of the "Saemaeul Geumgo Supervision Standards," which includes tasks for implementing management innovation measures for Saemaeul Geumgo. Through this revision, most regulatory differences with other mutual finance industries will be resolved by shortening the management improvement procedure for insolvent Geumgo, strengthening management improvement orders, and improving the net capital requirements of the capital ratio.

An MG Saemaeul Geumgo branch in a market in Seoul. Photo by Huh Younghan younghan@

First, the government plans to strengthen management improvement measures to enable quick recommendations for mergers and other actions regarding insolvent Geumgo. The deadline for submitting management improvement plans will be shortened from "within 2 months" to "within 1 month," and the implementation period for management improvement recommendations will be shortened from "within 1 year and 6 months" to "within 1 year," with each period to be determined by the chairman. Additionally, to ensure the enforcement of management improvement measures, the chairman of the central association must request the Minister of the Interior and Safety to issue a management improvement order for the target Geumgo, and the minister will notify the chairman and the Geumgo chairman of the management improvement measures.

For Geumgo with poor management performance, the requirements for appointing full-time executives have been strengthened. Until now, full-time executives could be appointed if the comprehensive management evaluation was grade 3 (normal) or higher, but the criterion of "net capital ratio of 0% or higher" has been added.

Furthermore, measures to enhance the effectiveness of external accounting audits will be established. If the audit opinion of the external accounting results is not appropriate, disadvantageous measures can be taken during the management status evaluation of the Geumgo. If the audit opinion in the external accounting audit report is qualified, adverse, or a disclaimer of opinion, the management capability section of the management status evaluation will be downgraded by one grade, and if an appropriate opinion is not received consecutively, further downgrades may be applied.

The loan limit system of the central association to Geumgo will also be improved to allow liquidity supply from the central association to Geumgo in unavoidable situations such as deposit withdrawals. Until now, Geumgo could not borrow from the central association beyond the total assets of the Geumgo. Going forward, if Geumgo intends to borrow funds exceeding five times the larger amount between its capital contribution or equity capital, it will be exceptionally possible with the approval of the Minister of the Interior and Safety.

The criteria for calculating the net capital ratio have also been aligned with other mutual finance sectors. Previously, Saemaeul Geumgo calculated the net capital ratio without deducting capital contributions from net capital, which was criticized for being overestimated compared to other mutual finance institutions. With this revision, when calculating the net capital of Saemaeul Geumgo, "capital contributions guaranteed for refund regardless of asset and liability status upon member withdrawal" will be excluded to prevent overestimation of the net capital ratio. However, to ease the burden on Geumgo due to changes in capital contribution requirements, this will be implemented from January 1, 2027.

So far, the Ministry of the Interior and Safety and the Saemaeul Geumgo Central Association have been focusing on implementing tasks that can be pursued without legislation since the central association announced the management innovation plan last November. Since January this year, they have cooperated in implementing the management innovation plan by operating the Management Innovation Implementation Promotion Council. Hansunki, Director of the Local Finance and Economy Office at the Ministry of the Interior and Safety, said, "Although Saemaeul Geumgo faced difficulties last year, it is now steadily and solidly promoting management innovation," and added, "We will actively work to further strengthen soundness management and supervision so that Saemaeul Geumgo can regain trust from the public."

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