South Korea's mutual finance sector is enlarging the subsidiaries that handle non-performing loans, reflecting mounting pressure to shore up asset quality as delinquency rates rise. KCU NPL Daebu, the bad-loan unit of the National Credit Union Federation of Korea, posted a hiring notice late last month and appointed Lee Jong-sung, a former executive director at United Asset Management, as chief executive on the 11th. Suhyup NPL Daebu is also recruiting, while MCI Daebu has already secured more than 40 employees. The staffing push comes as the sector's ratio of loans classified as substandard or below climbed to 5.55% at the end of last year, up 0.29 percentage points from a year earlier, and the delinquency rate rose to 4.62% from 2.97% two years earlier. Mutual finance groups are also building separate asset management firms to broaden their ability to buy and dispose of distressed assets. Those entities can operate under their own sector laws rather than the Lending Business Act, avoiding the rule that caps total assets at 10 times equity capital for existing NPL lending subsidiaries. A planned licensing system for purchased-debt collection is adding to the urgency, with the Financial Services Commission (South Korea's top financial regulator) set to submit a bill to the National Assembly this month that would require at least 20 permanent employees, including five specialists.