Donggyeongju Nonghyup Appeals to Subscribers to Cancel 8% High-Interest Savings Account

Hundreds of Billions in Annual Interest... Concerns Over Management Difficulties
"We Will Pay Compensation if Terminated," Plea Made

Donggyeongju Nonghyup in Gyeongju, Gyeongbuk, which faced difficulties after attracting a large amount of funds by selling high-interest products with an interest rate in the 8% range, has once again requested subscribers to cancel their contracts, stating that "there is a concern of bankruptcy."

According to the National Agricultural Cooperative Federation on the 5th, Donggyeongju Nonghyup recently sent letters appealing for contract cancellations to high-interest savings subscribers or posted notices on its website.

[Image source=Captured from Donggyeongju Nonghyup website]

About 900 billion KRW was attracted to the special savings account with an annual interest rate of 8.2%, which was sold non-face-to-face in November 2022. Although the initial target amount was 10 billion KRW, the amount far exceeded this because the early blocking of non-face-to-face account openings was not implemented.

Donggyeongju Nonghyup, a small-scale cooperative with assets of 167 billion KRW, is inevitably facing management difficulties as the interest cost for one year alone amounts to hundreds of billions of KRW. Since December 2022, it has appealed to subscribers to cancel their contracts, but about 233 billion KRW remains based on contract amounts. The total interest to be paid on this is 34.8 billion KRW. This is an unmanageable level for Donggyeongju Nonghyup, which usually generates an annual surplus of 500 million to 600 million KRW.

Donggyeongju Nonghyup posted on its homepage, "The remaining amount is too large for our cooperative to bear, and a deficit settlement in 2024 is inevitable, putting us at a crossroads of survival," and appealed, "If you cancel your savings accounts, we will provide compensation for damages."

The Moonmudaewang-myeon branch of the Korea Successor Agricultural Managers Association in Gyeongju also appealed through a statement, saying, "If the Nonghyup disappears due to bankruptcy, the greatest damage will be suffered by local farmer members," and added, "Although you may feel resentful toward Nonghyup employees, please cancel your savings accounts to prevent bankruptcy for the sake of farmers and local agriculture."