Introduction > History of the Korean Financial Industry

Nascent Stage

1878~1958

Nascent Stage 1878~1958
Jun. 1878	The modern banking system was introduced as Japan's First Bank opened Korea's first bank branch in Busan.
Jan. 1891	Imperial Life Insurance, a Japanese insurance company, opened a branch in Busan.
Feb. 1897	Hanseong Bank (later became Choheung Bank) was established using domestic private capital.
Nov. 1899	Daehan CheonIl Bank (later became the Commercial Bank of Korea) was established.
Feb. 1903	Hanseong Bank changed its name to Public Hanseong Bank.
Aug. 1906	HanIl Bank was created funded solely by domestic private capital.
Oct. 1909	The Bank of Korea was established, to which the central banking business of Japan's First Bank was transferred.
Aug. 1911	The Bank of Korea changed its name to Chosun Bank.
Jun. 1918	Chosun-Siksan Bank (later became the Korea Development Bank) was established.
Jan. 1921	Chosun Fire & Marine Insurance, Korea's first non-life insurance company, was created.
Aug. 1946	Chosun Non-Life Insurance Association was formed.
Sep. 1946	Korea's first life insurance company, Daehan Life Insurance, was established. Daehan Non-Life Insurance Association was registered as a legal entity. Kyeongseong Bank Association changed its name to Seoul Bank Association.
Nov. 1949	Korea's first securities house, Daehan Securities, was established.
Feb. 1950	Chosun Life Insurance Association was created.
Mar. 1950	"The Fifteen Principles for Economic Stability" were formulated to curb inflation.
Jun. 1950	With the promulgation of the Bank of Korea Act, the Bank of Korea (BOK) was established as the central bank, replacing the existing Chosun Bank.
Jul. 1950	The BOK initiated issuance of BOK coins and currency.
Feb. 1953	A currency reform was undertaken to prevent circulation of old coins and currencies and to change the currency unit from the "won" into the "hwan".
Nov. 1953	Daehan Securities Dealers Association was created.
Apr. 1954	The Korea Development Bank was established.
Dec. 1954	The Korean government signed the Combined Economic Board Agreement for a Program of Economic Reconstruction and Financial Stabilization with the UN Forces Headquarters that aims to restore balance in the country's finances and adopt a single exchange rate regime.
Aug. 1955	Korea joined the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD).
Jan. 1956	Korea Non-Life Reinsurance Corporation was established.
Mar. 1956	Daehan Exchange was opened (Twelve companies were listed including commercial banks and Korea Electric Power Corporation).
Nov. 1958	Chosun Life Insurance Association changed its name to Daehan Life Insurance Association.

Pre-Development Stage

1960~1979

Pre-development stage 1960~1979
Feb. 1960	Daehan Life Insurance Association changed its name to Korea Life Insurance Association.
May. 1961	The "Financial Activities-Freeze Policy" was announced by the Military Revolution Committee.
Jun. 1961	The Securities and Exchange Act was legislated to administer efficient securities transactions.
Feb. 1962	Korea's first retail bank, Korea Kookmin Bank, was established.
Apr. 1962	The Bank of Korea Act was amended to expand the Bank Supervisory Department into the Bank Supervisory Agency.
Jun. 1962	A currency reform was undertaken to change the currency unit from "hwan" to "won".
Jul. 1962	Amid inflationary pressure due to a surge in money supply, the deposit blockade was removed.
Mar. 1963	Daehan Non-Life Reinsurance Corporation was established.
May. 1963	Daehan Exchange was changed into Korea Exchange, a public system.
Mar. 1965	The single floating exchange rate regime was launched aimed at reducing problems with the existing exchange system.
Jan. 1967	Daegu Bank, the first regional bank, was set up.
Jun. 1967	A foreign bank, Chase Manhattan Bank, opened a branch in Seoul for the first time.
Nov. 1968	The Capital Market Development Act was enacted to introduce the modern capital market system.
Dec. 1968	Korea Investment Corporation (KIC) was established. Daehan Non-Life Reinsurance Corporation changed its name to Daehan Reinsurance Corporation. Korea Trust Bank, which was created to enhance capital financing functions of the financial industry, started its operations.
Feb. 1969	Daehan Guarantee Insurance was established to contribute to the national economy and the industry by providing credit guarantee services to individuals and businesses. Daehan Reinsurance Corporation started the export insurance business.
Aug. 1972	Under the presidential decree on economic stability and growth dubbed as "8/3 Emergency Action", issuances of corporate debentures were frozen and interest rates were cut. To improve the efficiency of the financial structure by bringing private loans into the light, laws were legislated that provide legal grounds for the establishment of investment financial companies, mutual credit banks and credit unions.
Dec. 1972	An act promoting public companies was enacted, which required designated companies to go public and offered public companies benefits.
May. 1973	The Korea Fire & Marine Insurance Association was created.
Dec. 1974	The National Investment Fund Act was legislated to reduce dependency on foreign capital and attract more capital to key industries.
Nov. 1975	With the integration of bank associations across the nation, the Bank Association was established.
Jun. 1976	The Korea Credit Guarantee Fund was created.
Jul. 1976	The Export-Import Bank of Korea (KEXIM) was established.
Jan. 1977	Designating 1977 as the year of insurance, the Ministry of Finance implemented measures to modernize the insurance industry such as revamping the terms and conditions of insurance policies. The export insurance business of Daehan Reinsurance Corporation was transferred to the KEXIM.
Feb. 1977	Daehan Investment Trust was created, replacing the KIC. The Securities and Exchange Commission and the Securities Supervisory Board were established.
Dec. 1977	The Insurance Business Act was amended to promote modernization of the insurance industry and to create the Korea Insurance Corporation.
Mar. 1978	Daehan Reinsurance Corporation changed its name to Daehan Reinsurance. Korea Insurance Corporation was established.
Jul. 1978	The trading volume in the securities market exceeded the ￦1 trillion mark. The Korea Exchange was moved to Yoido.
Jan. 1979	The size of the bond market surpassed the ￦1 trillion mark (public bonds: ￦461.4 billion, corporate bonds: ￦552.6 billion).

Development Stage

1980~1996

Development stage 1980~1996
Feb. 1980	The fixed exchange rate system was changed into a floating rate system based on a currency basket.
May. 1982	Yong-Ja Chang and husband Chul-Hi Lee were arrested on charges of fraud for manipulating promissory notes, which caused severe capital shortages at several corporations.
Jul. 1982	The Economic Plan for Transparent Transaction of Corporate Bonds & Normalization of Financial Transactions was announced to put into effect the Real Name Financial Transaction Act on July 1, 1983.
Dec. 1982	The Real Name Financial Transaction Act was legislated.
May. 1983	The Credit Management Fund was established to protect depositors of second-tier financial institutions.
Jul. 1983	Parts of the Real Name Financial Transaction Act came into effect.
Jul. 1983	Ministry of Finance (MOF) the Plan to Facilitate Functions of the Capital Market, which eased requirements for companies going public as well as IPOs, and encouraged seasoned equity offerings.
May. 1984	The Korea Federation of Banks was launched, replacing the Bank Association.
Jun. 1984	The MOF announced a plan to promote the bond market which included institutionalization of the OTC market and improvements to asset management methods of investment trusts.
Jan. 1985	Seoul hosted the annual IMF/IBRD meeting.
Dec. 1985	Policies for industrial modernization such as an amendment to the Tax Reduction Regulation Act and a proposal for the Industry Development Act were passed in the National Assembly.
Jun. 1986	The total market capitalization exceeded ￦10 trillion and securities transaction volume broke the record of ￦5 trillion.
Apr. 1986	The MOF announced the Plan to Raise Capital through the Capital Market which promotes rights offerings, corporate disclosure and issuance of corporate debentures.
Jul. 1986	Under the Industrial Development Act, an industrial rationalization system was implemented.
Apr. 1987	The Korea Securities Dealers Association opened the OTC securities market and established a task force for the modernization of the coal industry.
May. 1987	Ten government-owned companies including the Korea Exchange were designated to become privatized.
Jun. 1987	The Korea-Europe Fund was listed on the London Stock Exchange.
Aug. 1987	The KOSPI broke the record of 500 points.
Jan. 1988	The National Pension Scheme was launched. The amount of financial savings surpassed the ￦100 trillion mark.
Jan. 1989	The government removed the ceiling on overseas investment by individual investors set at US$1 million as part of efforts to facilitate overseas investment.
Mar. 1989	The market capitalization of listed companies went beyond ￦70 trillion and KOSPI surpassed the 1,000 point mark.
Apr. 1989	The Korea Insurance Corporation changed its name to the Insurance Supervisory Board.
Sep. 1989	The exchange rate was liberalized.
Nov. 1989	Korea Guarantee Insurance was established.
Jan. 1990	The Anti-trust & Fair Transaction Act, which covered the overall financial industry including insurance business, was amended.
Sep. 1990	The Korea-Asia Fund was created and listed on the Hong Kong Exchange and the London Stock Exchange.
Jan. 1992	The Daehan Securities Dealers Association changed its name to Korea Securities Dealers Association. Foreigners were allowed to invest in domestic stocks.
Jul. 1992	The Korea Export Insurance Corporation was created, to which the export insurance business sector of the KEXIM was transferred.
Aug. 1992	The plan to stabilize the securities market was announced on August 24, which showed the government's firm commitment to stabilizing real interest rates at a lower level.
Feb. 1993	The MOF announced a plan to facilitate overseas securities investment that enabled business and individual investors to make indirect investments in foreign securities.
Apr. 1993	The MOF announced a plan to advance the bond market that included real-time disclosure of yields and adoption of a dealer system. The government announced the Five-Year Financial Reform Plan for the New Economy mainly aimed at opening a Stock Index Futures Market in the Korea Exchange.
Aug. 1993	The Real Name Financial Transaction & Guarantee of Secrecy was introduced under the Presidential decree.
Jan. 1995	ADB's won-denominated bonds were listed on the exchange.
Dec. 1995	The Depositor Protection Act was legislated.
Jan. 1996	Financial institutions were given freedom to set up branches.
Jun. 1996	The Korea Deposit Insurance Corporation was established.
Jul. 1996	The KOSDAQ market opened.
Dec. 1996	Korea was admitted into the OECD.

Restructuring Stage

1997~2002

Restructuringstage 1997~2002
Jan. 1997	Hanbo Group, the 14th largest chaebol, went bankrupt. The Ministry of Finance & Economy (MOFE) allowed stock index options to trade in the Korea Exchange.
Apr. 1997	Seoul held the 10th meeting of the International Council of the Securities Associations.
Jul. 1997	Kia Group, the 7th largest conglomerate, went bankrupt. MOFE allowed securities houses to handle commercial papers and merchant banks to trade securities.
Aug. 1997	The Act on Companies Specialized Loan Business was enacted.
Nov. 1997	The government asked the IMF for an emergency bail-out package.
Dec. 1997	The government and the IMF agreed on a bail-out package worth US$57 billion. Fourteen merchant banks, two securities companies and one investment trust company were shut down. (Merchant banks: Kyeongnam, Kyeongil, Korea, Samsam, Shinsegye, SSangyong, Cheongsol, Hangdo, Hangsol, Nara, Daehan, Shinhan, Hanhwa, Joongang; Securities companies: Korea, Dongseo; Investment trust company: Shinsegye) The Bank of Korea Act was revised and the Act on the Establishment of Financial Supervisory Organizations (EFSO) was legislated to establish the Financial Services Commission(FSS), FSC's executive arm, which consolidated four financial supervisory authorities?the Office of Bank Supervision, the Securities Supervisory Board, the Insurance Supervisory Board and the Non-bank Supervisory Authority.
Jan. 1998	Classifying Korea First Bank and Seoul Bank as insolvent financial institutions, the government ordered injection of public funds and capital reduction.
Feb. 1998	Prompt Corrective Action (PCA) was invoked against twelve banks. Management Improvement Requirement (Dongnam, Donghwa, Daedong, Pyeonghwa, Gangwon, Choongbook Bank) Management Improvement Recommendation (Choheung, Commercial, Hanil, Korea Exchange, Choongcheong, Kyeonggi) The business licences of ten merchant banks were revoked (An additional six merchant banks had their licences revoked from February through August).
Mar. 1998	Under the Act on the Financial Institutions Specialized in Loan Business, the Korea Association of Financial Institutions Specialized in Loan Business was created.
Apr. 1998	The Financial Supervisory Commission (FSC) Sixty-four major debtor groups and creditor banks signed an agreement on financial structure reform.
May. 1998	A task force for restructuring was launched within the FSC.
Jun. 1998	Five ailing banks were driven out of the market (Donghwa, Dongnam, Daedong, Choongcheong, Kyeonggi). Business licences of Korea Securities and Dongseo Securities were cancelled. Major creditor banks assessed 55 companies as insolvent.
Jul. 1998	Creditor banks chose four subsidiaries of Kohap Corporation to go through corporate work-outs.
Aug. 1998	Four life insurance companies were shut down (Imperial, BYC, Taeyang, Korea Life Insurance).
Sep. 1998	Five conglomerates agreed to the Big Deal and exchanged businesses among themselves. The government revoked the banking business licences of Donghwa, Dongnam, Daedong, Choongcheong, and Gyeonggi Bank.
Oct. 1998	The KOSDAQ Committee was created to enhance fairness and efficiency of the tech-heavy market.
Nov. 1998	Daehan Guarantee Insurance acquired Korea Guarantee Insurance, changing its name into Seoul Guarantee Insurance.
Dec. 1998	Daewoo Group and its creditor banks made an agreement to improve financial structure. The securities licence of the Korea Industrial Securities was revoked.
Jan. 1999	The Financial Supervisory Servie (FSS) was established (integrating the Office of Bank Supervision, the Securities Supervisory Board, the Insurance Supervisory Board, the Non-bank Supervisory Authority) The securities business license of Hannam Investment Securities was revoked.
Mar. 1999	The securities business license of Jangeun Securities was revoked.
Apr. 1999	Daewoo Group announced a restructuring plan. The Korea Futures Exchange opened. As the first phase of foreign exchange liberalization, the government abolished the Foreign Exchange Management Act and legislated the Foreign Exchange Transaction Act. The security business licence of Dongbang FereGreen Securities was revoked.
Jul. 1999	Daewoo Group announced plans to implement and accelerate their restructuring plan. Daewoo provided collateral amounting to ￦10.1 trillion for creditor banks. Daewoo President Woo-Joong Kim stepped down and Daewoo established the accountable management system.
Aug. 1999	To respond to requests for redemption of beneficiary certificates by investment trust companies due to Daewoo’s bankruptcy, the government established a stabilization fund for bonds and announced a plan to stabilize the financial market. Corporate work-out plans were conducted on twelve subsidiaries of Daewoo Group.
Sep. 1999	The FSC made an investment commitment with New Bridge Capital on the sale of Korea First Bank.
Dec. 1999	A task force was created to investigate accounting fraud at Daewoo Group.
Jan. 2000	The credit history of 380,000 credit delinquents were deleted.
Apr. 2000	The circuit breaker was used in the stock market for the first time.
Aug. 2001	Korea repaid IMF earlier than scheduled. The Corporate Restructuring Promotion Act was legislated.
Sep. 2001	The Corporate Restructuring Promotion Act was implemented.
Jul. 2002	A plan to introduce the individual work-out was announced.
Aug. 2002	Six banks were chosen for the second phase of banking restructuring (Choheung, Hanvit, Korea Exchange, Pyeonghwa, Gwangju, Jeju).

Globalization Stage

2002~2008

Globalization stage 2002~2008
Sep. 2002	The Fair Disclosure system was introduced.
Oct. 2002	The Korea Exchange opened the Exchange Traded Fund (ETF) market.
Aug. 2003	Bancassurance was introduced.
Oct. 2003	The Act on Indirect Investment Asset Management Business was legislated. Regulations on investment advisory businesses were integrated into the Act on Security Investment & Trust and the Act on Security Companies. Indirect investment assets was redefined to include derivatives, real estate and real assets.
Dec. 2003	The government announced a national agenda to transform Korea into a financial hub of Northeast Asia.
Jan. 2004	The Act on Indirect Investment Asset Management Business took effect.
Dec. 2005	Retirement pension system was adopted.
Apr. 2007	KORUS FTA was signed
Apr. 2007	Issues regarding listing of life insurers were resolved.
Aug. 2007	The Financial Investment Services and Capital Markets Act was adopted.
Mar. 2008	The Financial Services Commission was established.