The Shinhan Credit Union will begin operations of its new 'Shinhan Asset Management Company' next month, dedicated to managing bad loans.
The Financial Services Commission announced on October 6 that a revision to the Credit Union Act was approved during a Cabinet meeting. Under the revised regulations, the Shinhan Asset Management Company will be able to purchase bad debts from credit unions and the central association, as well as fixed assets that need to be disposed of due to management and financial improvement measures.
Additionally, fixed assets that are no longer in use due to mergers, business transfers, or contract assignments will also be eligible for purchase.
The acquisition price for bad assets will be based on objective valuations from appraisal firms, taking into account senior claims, property rights, and lease rights.
In cases where it is difficult to determine the price in advance, a post-settlement of the difference between the acquisition price and the disposal price will be allowed. Furthermore, the asset management company will have the legal basis to process unique identification information, such as resident registration numbers, when necessary during the purchase, sale, and collection of bad assets.
The criteria for appointing a standing auditor have also been clarified. Credit unions with total assets of 300 billion won or more will be required to appoint a standing auditor. Even if not mandatory, credit unions with total assets of 200 billion won or more can choose to appoint a standing auditor if the board of directors deems it necessary for sound management, internal control enhancement, and prevention of financial accidents.
The Financial Services Commission expects this initiative to alleviate the management burden on small and medium-sized credit unions while allowing them to strengthen internal controls autonomously.
Meanwhile, the revised regulations will take effect on October 22. The Shinhan Asset Management Company plans to start its bad debt acquisition operations after completing subsequent procedures, including investments from the Shinhan Central Association and approvals from the Financial Services Commission, in November.
* This article has been translated by AI.
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