Federation Analyst, Cathi Kim, represented the Federation at the 4th Annual Asia Future Forum in Seoul, Korea. Ms. Kim previewed highlights of an upcoming Federation report on Secondary Capital and its use as an engine of growth by community development credit unions in the United States.
This year's Forum theme "Era of Inclusive Growth: Innovation of Enterprise and Society" focused on innovations in social economy and attracted over 500 attendees from Japan, China and Korea. Presenting at the Community Finance session on October 31, Ms. Kim provided background on the products, services and delivery systems community development credit unions (CDCUs) in the U.S. provide to low- and moderate-income Americans.
The Korean credit union movement is the 4th largest worldwide, with 950 credit unions, 6 million members and $52 billion USD in assets. The National Credit Union Foundation of Korea describes the credit union movement in Korea as providing "high value financial services for low and middle income families while promoting the value of cooperation". Interest about CDCUs among Forum attendees was particularly high, according to Kim, because there is no CDCU equivalent in Korea. "It is ... important to strengthen and solidify the basis for social finance, especially community finance [which] is increasing around Seoul. The session on social finance was extremely helpful as we were able to get inspired from the CDCU experience in the U.S." says Jinsoo Mun, President of the Korea Social Finance Institute.
Secondary capital, also referred to as supplementary capital, is of particular interest to Korea's credit unions, which have continued to grow in deposits and loans despite the downturn in the global economy. "Secondary capital loans are long term loans that growing credit unions can use to expand lending in their communities. Secondary capital counts toward the credit union's net worth for the initial period of the loan, improving net worth and helping credit unions meet required capital standards. Several Federation members have used secondary capital loans to great success," says Kim. The Federation advocated on behalf of low-income credit unions to accept Secondary Capital, which was recognized by NCUA in 1996.
The Federation's next funding round, including Secondary Capital, will be announced later this month. To learn more about the Federation's Secondary Capital program, including eligibility, visit www.inclusiv.org.