SEOUL February 10, 2026 — The Korean Federation of Community Credit Cooperatives [ KFCC ] is mounting an all-out drive to normalise operations, including the merger of 25 co-operatives whose financial soundness deteriorated last year. The federation plans to improve key soundness indicators, such as the arrears rate, through additional mergers this year.
According to reporting compiled by ChosunBiz on February 9, six of the 229 co-operatives in the Seoul area were merged into nearby institutions last year. Daegu recorded the highest number of mergers, with eight. Incheon had three, while Busan and North Gyeongsang had two each. Gwangju–South Jeolla, Ulsan–South Gyeongsang, Gangwon and North Chungcheong recorded one merger apiece. Nationwide, the number of co-operatives fell from 1,276 at the end of 2024 to 1,251 by the end of last year.
The merged Seoul-area co-operatives were Wonhyo and Hooam-dong in Yongsan district; Oksu in Seongdong district; Sinchon in Seodaemun District; Deungchon-dong in Gangseo district; and Songpa in Songpa district. Deungchon-dong and Oksu were in a state of complete capital erosion, with total capital in the red as of the end of June last year.
Wonhyo, which had operated since its establishment in 1975, was merged into Hyochang. In an effort to restore soundness, Wonhyo sold its headquarters building and land near Hyochang Park Station on Seoul Subway Line 6 — which it had used since 1989 — for 9.1 billion won in December 2024. However, as of the end of June last year, its ratio of substandard-and-below loans, a key measure of non-performing assets, stood at 28.86 percent. Its loss risk-weighted loan ratio, which assigns greater weight to loans with a higher probability of default, was 57.45 percent.
Sinchon, founded in 1975, was also merged into Dongnipmun in May last year. Once regarded as a strong co-operative benefiting from a prime commercial district, Sinchon began to accumulate bad debts after a real-estate investment made in 2021 failed. It was in a state of complete capital erosion as of the end of December 2024, just prior to the merger.
The KFCC has designated normalisation as its key goal for this year. At the year-end settlement of accounts, the arrears rate was in the 5 percent range, which is considered stable. As of the end of June last year, however, the arrears rate stood at 8.37 percent, the highest level in 20 years.
Financial authorities and the Ministry of the Interior and Safety — which oversees the KFCC — have also launched a special management task force to address troubled co-operatives. They plan to conduct joint inspections of 35 cooperatives in the first half of this year alone.
An official at the National Federation of Community Credit Cooperatives said: “If we work tirelessly, we expect to be able to return to a normal track within the year.”
https://thecooperator.news/uganda-korea-sign-financing-agreement/
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