Nonghyup to Divide Into Bank, Agricultural Distributor
By Yoon Ja-young
Staff Reporter
The National Agricultural Cooperative Federation (NACF), or Nonghyup, will be divided into two entities ― the bank and the agricultural products distributor.
However, it is asking the government to provide trillions of won in support.
Nonghyup announced its business structure reform plan after a board of directors' meeting, Thursday.
According to the plan, its credit business will separate from the company in 2012 and become a financial holding company. There will be bank, securities company, asset management and futures companies under the new formation.
An agricultural products distribution business, meanwhile, will be split off as an economic holding company as late as 2015.
Nonghyup's banking business has been profitable, thanks to the monopolistic status in rural areas, which could make up for the losses in its agricultural products distribution business.
However, Nonghyup's concentration on the profitable banking sector has caused it to face criticism that says it should be working in the interest of farmers instead of focusing on making money in banking.
The division plan, however, goes against the government's plan of splitting both off by 2011. Moreover, it is requesting that the government support the plan by giving 6 trillion won for the agricultural products distribution business. According to Nonghyup, it takes around 9.6 trillion won to split the business off.
However, the Ministry for Food, Agriculture, Forestry and Fisheries said it can determine how much to fund only after the passage of the division plan.
The Ministry of Strategy and Finance, meanwhile, is concerned that it is difficult to fund that much amid the global financial crisis.
The labor union, meanwhile, is opposing the split.
"The division of the credit business and the economic business is a means of restructuring the workers," the union announced.
"When Nonghyup becomes a financial holding company, it means it will belong to the shareholders, not farmers. The shareholder capitalism goes directly against the idea and the principle of the cooperative foundation."
Enjoying a monopolistic status for farmers, Nonghyup has been notorious for endless corruption scandals. Reforming Nonghyup was the aim of many former presidents, but none of them have succeeded so far due to deep-rooted corruption and the concentration of power.