Korean Federation of Community Credit Cooperatives (KFCC) has surprisingly selected Ryu Hyuk, Co-CEO of Istum Asset Management, as the next head of KFCC’s credit business.

The state-run institution held a board meeting on May 7 and approved Ryu as the next head of its credit business, sources familiar with the matter said on May 8. Ryu will officially become the new head if approved at the extraordinary general meeting of delegates on May 22.

The selection process has been underway to appoint the new head of KFCC’s credit business, with Kwon Kwang-seok, former head of the business, appointed as the new CEO for Woori Bank in February. The federation shortlisted three candidates – Ryu, NongHyup Bank’s former CEO Lee Dae-hoon, KFCC’s former chief investment officer (CIO) Jung Jae-ho – through the document screening process last month.

The banking industry widely expected Lee to become the new head as he was the first CEO of NongHyup Bank to serve three terms.

Jung also had a good understanding of KFCC. Jung had served as CIO at KFCC between 2010 and 2014 and re-appointed as CIO in 2016. Jung led the institution’s investment activities for six years in total and has built a good relationship with KFCC officials.

The appointment of Ryu was surprising but KFCC has decided to select him in recognition for his expertise in real estate, industry observers said.

The move is in line with the institution’s investment plan this year. The KFCC plans to invest a total of seven trillion won in alternatives through blind-pool funds over the next three years. The federation is likely to reconstruct its portfolio by reducing the proportion of bonds to around 60 percent from 70 percent while expanding the proportion of alternative investments to 30 percent level.

Separately, KFCC named Park Cheon-suk, former Managing Director of Heungkuk Life Insurance, as the foundation’s new CIO in April. He spent his career at Samsung Life Insurance, Samsung Asset Management, ING Investment Management Korea, National Pension Service and Heungkuk Asset Management. Park is expected to lead KFCC’s bond investments.

Real estate has been the KFCC’s weakest point among all investments made by the institution. In the past, the KFCC made a loss from its approximately 40 billion won investment in blind-pool real estate funds in the aftermath of the 2008 global financial crisis, which resulted in a stricter supervision by its competent department in the Ministry of the Interior and Safety (MOIS) on the federation’s investment activity. Consequently, it has stopped investing in blind-pool funds for the last eight years since 2012. After the incident, there has been an internal consensus that an expert who is capable of overseeing the real estate sector has to be appointed as the new head of its credit business.

Ryu, who spent his career at Samsung Life Insurance and Korea Real Estate Investment & Trust, specializes in real estate. Ryu has served as Co-CEO at Istum Asset Management since 2005. Ryu and the institution’s newly appointed CIO Park are also expected to work in harmony with both spent their career at Samsung Life Insurance. (By reporter Jo Se-hun)