Credit Union Gets FSC Approval for Equity Investment to Establish Asset Management Company, Accelerating NPL Resolution

[Financial News] The Credit Union is moving ahead in earnest with plans to establish an asset management company to manage nonperforming loans. It plans to begin purchasing nonperforming loans by year-end to help improve the financial soundness of its member unions.
According to sources in the financial sector on the 23rd, the National Credit Union Federation of Korea received approval from the Financial Services Commission on the 21st for an equity investment to establish the Credit Union Asset Management Company. 
The Credit Union has been preparing to establish an asset management company under the amended Credit Union Act, promulgated last April on the 21st, by consulting with financial authorities, drawing up an establishment and operating plan, and revising relevant regulations. With this approval for an equity investment, it can now move ahead in earnest with the next steps to establish the corporation.
The Credit Union plans to complete the incorporation registration and business registration this month. It will then proceed in stages with hiring staff and setting up operating systems, with plans to begin purchasing nonperforming loans by year-end.
The Credit Union Asset Management Company will be a separate legal entity specializing in the professional and systematic management of the Credit Union’s distressed assets. Initially, it will handle the purchase and sale of nonperforming loans, and later plans to expand its business to include credit investigations of parties to debt relationships and debt collection. It also plans to establish an integrated system for managing nonperforming loans to help improve the financial soundness of the Credit Union’s member unions.
This is expected to address the limitations of existing methods for resolving nonperforming loans while improving the speed and efficiency of distressed-asset management.
Go Yeong-cheol, chairman of the National Credit Union Federation of Korea, said, “This approval for an equity investment is an important stepping stone toward strengthening the Credit Union’s system for managing distressed assets.” He added, “We will work to establish the Credit Union Asset Management Company as a specialized institution that professionally and systematically manages nonperforming loans and supports the recovery of the member unions’ financial soundness and the normalization of their operations.”
[email protected] Seo Ji-yoon Reporter