Saemaeul Geumgo Central Association: "Reports of Capital Impairment Expansion Are Exaggerated... Overall Soundness Remains Intact"

The Saemaeul Geumgo Central Association has issued an official statement regarding recent media reports about the "expansion of capital impairment at Saemaeul Geumgo," asserting that "this is merely a temporary deterioration of indicators, and customers' assets remain safe."

Saemaeul Geumgo Central Association Building Exterior

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In an explanatory document distributed on September 5, the Central Association stated, "The credit unions reported as experiencing capital impairment have seen their indicators worsen due to expenses incurred in setting aside loan loss provisions, which resulted from the downturn in the real estate and construction sectors." The association emphasized, "This situation can be fully recovered through future improvements in operating profit and the reversal of provisions."

◆ Overall Soundness Indicators 'Favorable'

As of June 2025, the net capital ratio of all Saemaeul Geumgo branches stood at 7.68%. This significantly exceeds the 4% regulatory ratio set by the Ministry of the Interior and Safety. The Central Association explained, "The fact that some credit unions are in a state of capital impairment does not provide grounds to doubt the overall solvency or crisis response capabilities of Saemaeul Geumgo as a whole."

◆ Structural Improvement Through Mergers

The Central Association is continuously pursuing structural improvements through mergers of credit unions in cooperation with the Ministry of the Interior and Safety. From July 2023, following the withdrawal incident, until June 2025, a total of 26 credit unions have completed mergers. Throughout this process, all customer deposits and equity capital have been safely transferred in full, regardless of the amount. Of the 23 credit unions identified as being in complete capital impairment, mergers have already been completed for four, and restructuring or merger procedures are underway for the remainder. The Central Association added, "Through responsible mergers, we are ensuring stable operations without any customer losses."

◆ "Strengthening Our Core Role as a Community Financial Institution"

The Saemaeul Geumgo Central Association is focusing not only on improving financial indicators, but also on restoring its identity as a community financial institution. A representative of the Central Association stated, "Through structural improvement and management innovation, we will reinforce the role of local financial cooperatives and make the protection of customer assets our top priority."

The issue of capital impairment at Saemaeul Geumgo is not merely a matter of numbers, but is directly linked to trust in local finance. Whether the "structural improvement" mentioned by the Central Association will go beyond being a slogan and lead to tangible results that restore the essential role of a community financial institution will be a key issue going forward.

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