MG Credit Union Establishes 500 Billion Won PF Normalization Fund

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The National Credit Union Federation of Korea (MG Community Credit Cooperatives) announced on November 14 that it has been pursuing restructuring efforts by establishing the UAMCO-MG Community Credit Cooperatives PF Normalization Fund worth 500 billion won in September last year, aiming to normalize distressed project financing (PF) sites and improve the financial structure of the cooperatives.

The PF Normalization Fund is leading its first restructuring by investing 122.1 billion won in the Seongsu-dong office development project, for which the cooperative had previously provided a 70 billion won bridge loan.

The fund purchased 58.1 billion won out of the cooperative's 70 billion won loan receivables and made a new investment of 64 billion won for project development, signing a total investment commitment of 122.1 billion won. As of November 2025, 79.1 billion won, or 65% of the committed amount, has been executed.

The cooperative recovered the entire 58.1 billion won of the 70 billion won in at-risk receivables through the sale, while the remaining 11.9 billion won in receivables will be maintained as a subordinated loan. Loans that were previously subordinated to the cooperative's bridge loan prior to restructuring were converted into equity through the restructuring, thereby enhancing the business feasibility of the development.

The office development project is scheduled for completion in 2027, and if the project is completed as planned, it is expected that the cooperative will also be able to easily recover the remaining 11.9 billion won in receivables.

An official from the National Credit Union Federation of Korea stated, "The Seongsu-dong office development project is a successful restructuring case that enabled business normalization through the PF Normalization Fund and the smooth recovery of PF loans at risk of default." The official added, "We will continue to promote restructuring focused on projects with guaranteed returns, supporting the normalization of development projects facing suspension and improving the financial structure of the cooperative."

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