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Aug 17, 2023
- FSC Vice Chairman Holds Media Briefing on the Progress and Achievements of Capital Market Reform Agendas
- Vice Chairman Kim So-young of the Financial Services Commission held a media briefing on the progress and achievements of the governments capital market reform agendas on August 17. The following is a summary of Vice Chairman Kims remarks. I. Key Achievements This administration has been actively pursuing capital market reforms as a key part of the governments policy priority. In particular, the government has taken bold steps to resolve the problem of the so-called Korea discount by enhancing investor protections, removing outdated regulations and overhauling rules to foster innovation in the market. Despite the presence of difficult economic and financial conditions, there have been some favorable outcomes achieved thank to active cooperation between relevant institutions and industries. Restoring Investor Trust First, the government has prioritized in implementing a set of measures aimed at restoring investors trust in the capital market. In this regard, the governments policy focused on (a) strengthening the rights and interests of general shareholders, (b) bolstering response against fraudulent and unfair trading activities, and (c) ensuring order and fairness in the market. With regard to strengthening protections for general shareholders, we have put in place three layers of protection mechanisms at the end of last year to ensure that the rights and interests of general shareholders are thoroughly guaranteed in an IPO of a split-off subsidiary. Since the introduction of the measures, we have seen changes in corporate practices as more companies are drawing up shareholder protection plans on their own and communicating with shareholders to seek their consent. To protect general shareholders from unforeseen damages caused by insider transactions involving large shareholders or executive officers, we introduced a rule requiring corporate insiders to disclose their share trading plans before the expected trading date. To ensure that general shareholders can also
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Aug 16, 2023
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Aug 16, 2023
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Aug 14, 2023
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Aug 09, 2023
- Household Loans, July 2023
- The outstanding balance of household loans across all financial sectors rose KRW5.4 trillion in July 2023 (preliminary), going up for the fourth consecutive month. Compared to the same month last year, household loans dropped 0.8 percent. * Change (in trillion KRW): -8.1 (Jan 2023), -5.1 (Feb), -5.1 (Mar), +0.2 (Apr), +2.8 (May), +3.5 (Jun), +5.4 (Jul) (By Type) Home-backed mortgage loans grew at a slower pace but the pace of decline in other types of loans also slowed. Mortgage loans rose KRW5.6 trillion, despite a decline of KRW0.4 trillion in the nonbanking sector, as banks saw a rise of KRW6.0 trillion. Other types of loans fell KRW0.2 trillion as both banks and nonbanks saw drops of KRW0.01 trillion and KRW0.2 trillion, respectively. (By Sector) Household loans rose in the banking sector but declined in the nonbanking sector. Banks saw a rise of KRW6.0 trillion of household loans in July, which went up for the fourth straight month. Home mortgage loans went up KRW6.0 trillion in the banking sector as individual mortgage loans (up KRW3.9 trillion) and policy mortgage loans (up KRW2.4 trillion) increased. Jeonse loans (down KRW0.2 trillion) and group lending for new apartment subscription (down KRW0.1 trillion) declined. Other types of loans fell KRW0.01 trillion in the banking sector. Household loans in the nonbanking sector declined KRW0.6 trillion due to a drop of KRW1.6 trillion in the mutual finance sector, although insurance companies (up KRW0.5 trillion), savings banks (up KRW0.1 trillion) and specialized credit finance businesses (up KRW0.5 trillion) saw growths. As the growth of household loans has been picking up since April with the volume of housing transactions recovering recently, the financial authorities will closely monitor trends in household loans and work to prepare preemptive measures to stably manage the growth of household loans. * Please refer to the attached file for details.
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Jul 27, 2023
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Jul 27, 2023
- Authorities Propose Measures to Improve Special Listing Procedures for High-tech Companies
- The Financial Services Commission held a meeting with the relevant government ministries and private sector entities on July 27 and unveiled a plan to improve the special listing procedures for technology companies. The plan includes 14 specific reform items from the stage of listing application to listing review to post-listing management. First, in the listing application stage, a new super gap tech listing track will be created for high-tech and strategically critical technology companies, for instance in deep tech or deep science sectors. Among them, businesses that are market-tested for their growth potential will be allowed to have a tech assessment conducted only by a single entity. They need to be designated as national strategic technology companies or national advanced strategic technology companies as prescribed by the relevant laws, have market capitalization of KRW100 billion or more and have received investment of KRW10 billion or more in the past five years. In addition, a business eligible to apply for the super gap tech listing track will be allowed to seek a special tech listing track even when its largest investor is a middle market enterprise, considering wide adoption of open innovation business models based on collaboration between an SME and a middle market enterprise. However, the size of investment by a middle market enterprise will be limited to less than fifty percent to prevent potential problems regarding the ownership of the company. Also, the complex structure of the current special tech listing track will be made simpler and more reasonable. For instance, businesses with technological prowess will be able to apply through innovative technology track, while those with distinctive business models can apply through business model track. Second, in the listing review stage, a fast-track review process will be granted to those that have been turned down previously for reasons other than their technology or business viability. In this case,
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Jul 26, 2023
- Housing Loan Rules Temporarily Eased to Facilitate Landlords to Return Rent Deposits
- The government announced that the housing loan regulations applied on landlords who are using bank loans (excluding internet-only banks) to return rent deposits to their current tenants will be temporarily eased for one year from July 27, 2023 until July 31, 2024. Under this scheme, landlords will be able to obtain bank loans for the difference between the previous and current jeonseprice of their property. Instead of the 40 percent debt service ratio (DSR) currently in place, a 60 percent debt to income (DTI) ratio will be applied, while the rent to interest(RTI) ratio will be lowered from 1.25 to 1.5 times currently to 1.0 times. With unexpected declines in jeonse prices recently, the measures intend to support tenants to move out on schedule by addressing the problem of a delay in collection of rent deposits or worries about the risk of not being able to receive their rent deposits. When there is no subsequent occupant from whom the landlord can get rent deposit to pay the current tenant immediately, this program allows landlords to use bank loans up to the limit of the eased DTI and RTI ratios. In this case, the landlord will need to fill vacancy and get a subsequent tenant within one year to repay the loan. Declining jeonse prices can cause problems as tenants experience difficulties in receiving their rent deposits back and moving to new places. Therefore, the eased lending rules being applied temporarily for one year are intended to minimize market shock. In order to prevent a potential increase in household debt and to minimize the risk of rent deposits not being returned to subsequent tenants, the government will ensure that the landlords financial capacity to return deposits is thoroughly assessed and that sufficient safeguards are prepared for tenants. The eased lending rules will be implemented through an administrative guidance (July 27). Revision to the regulation on the supervision of banking business will also be completed soon in August. * Please re
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Jul 25, 2023
- Government Approves Revised Rules to Improve Financial Dispute Mediation Procedures
- The Financial Services Commission announced that a revision bill of the Enforcement Decree of the Act on the Protection of Financial Consumers, which contains measures to improve the financial dispute mediation procedures, has been approved by the government during a cabinet meeting held on July 25. With financial products becoming increasingly diversified and complex in their type and structure, the number of disputes between financial consumers and financial companies has also increased. Due to the increased volume of dispute cases (28,118 in 2018 to 36,508 in 2022, based on the number of registered complaints), the time it takes to process mediations has also increased, causing inconvenience to consumers. Against this backdrop, the revision aims to enhance the speediness and independence of the financial dispute mediation procedures. First, a fast-track mediation process will be newly introduced, allowing cases to move onto the final stage of mediation committee without having to go through the settlement recommendation stage. Whether a case gets fast-tracked will be determined depending on the mediation amount in question and the extent of stakeholders involved. Second, additional standards have been introduced regarding the method of designating members of financial dispute mediation committee to enhance the level of independence in the operation of mediation committees and ensure fairness in how committee members are selected. The revision also includes some other improvement measures that have been brought up by FSCs ombudsman. The revised measures are scheduled to be publicly announced on August 1 and become effective after three months (November 2) from the day of announcement. * Please refer to the attached file for details.
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Jul 20, 2023
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Jul 19, 2023
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Jul 19, 2023
- FSC Designates Eight More Data Specializing Institutions to Promote Big Data Analytics
- The Financial Services Commission held the 14th regular meeting on July 19 and designated eight additional data specializing institutions (BC Card, Samsung SDS, Samsung Card, Shinhan Bank, Shinhan Card, LG CNS, Coocon, and Statistics Korea), bringing the total number of data specializing institutions to twelve. Data specializing institutions provide data convergence service on behalf of businesses when they develop new business strategies or services and evaluate the appropriateness of the pseudonymized data. In order to ensure the safety and efficiency of big data usage in financial sectors, data specializing institutions have been designated by the FSC since 2020 pursuant to the Credit Information Use and Protection Act. Since 2020, business demand for data convergence particularly between the financial and non-financial sectors has continued to increase. To ensure fairness, transparency and objectivity in data convergence, the seven newly designated data specializing institutions from the private sector other than Statistics Korea will be required to provide 50 percent or more of their data convergence services to non-affiliated external entities. With the addition of eight more data specializing institutions, it is expected that data convergence between different sectors as well as opening up of more private sector data will be promoted. * Please refer to the attached file for details.
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Jul 17, 2023
- Authorities to Ease Rules on Overseas Subsidiary Ownership of Financial Companies
- The financial regulatory reform committee held its 8th meeting on July 17. At the meeting, participants discussed (a) measures to ease rules on domestic financial companies ownership of subsidiaries in overseas markets, (b) ways to improve licensing standards on mergers between savings banks and (c) recent progress in the implementation of financial regulatory reform agendas sought by the committee. With regard to the measures to ease rules on financial companies ownership of subsidiaries in overseas markets, the proposed measures will first ease rules on domestic banks, insurance companies, specialized credit finance companies and fintech businesses making investment in foreign financial and non-financial companies within the scope of regulatory boundaries exhibited in overseas markets. For instance, a specialized credit finance business specializing in auto finance products may be able to acquire a rental car business in an overseas market to expand its sales operation. An insurance company will be able to own a foreign bank operating in an overseas market. A fintech business belonging to a domestic financial holding company can acquire an investment advisory or investment consulting business as a subsidiary. As many financial companies have been making requests to ease regulations regarding their foreign subsidiary holdings, it is expected that business diversification driven by local demand will help boost their competitiveness in overseas markets. Second, the proposed measures will ease rules on the maximum level of credit extension allowed for foreign subsidiaries. Through a revision to the supervisory regulations on financial holding companies, authorities plan to increase the maximum level of credit (within 10%p) that can be extended by a financial company to its foreign subsidiary for certain period of time (i.e. for first three years). Third, for the rules that have been set up for domestic environment and are thus not quite suitable to be applied on forei
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Jul 12, 2023
- Household Loans, June 2023
- The outstanding balance of household loans across all financial sectors went up KRW3.5 trillion in June 2023 (preliminary), rising for the third consecutive month. Compared to the same month last year, household loans fell 1.2 percent. * Change (in trillion KRW): -3.4 (Dec 2022), -8.1 (Jan 2023), -5.1 (Feb), -5.1 (Mar), +0.2 (Apr), +2.8 (May), +3.5 (Jun) (By Type) Home-backed mortgage loans edged up for four months in a row but other types of loans declined at a faster pace in June. Mortgage loans rose KRW6.4 trillion, with a drop of KRW0.6 trillion in the nonbanking sector and an increase of KRW7.0 trillion in the banking sector. Other types of loans fell KRW2.9 trillion as both banks and nonbanks saw drops of KRW1.1 trillion and KRW1.8 trillion, respectively. (By Sector) Household loans rose in the banking sector but declined in the nonbanking sector. Banks saw a rise of KRW5.9 trillion of household loans in June, which went up for the third straight month. Home mortgage loans went up KRW7.0 trillion in the banking sector as individual mortgage loans (up KRW3.7 trillion), policy mortgage loans (up KRW2.6 trillion), jeonse loans (up KRW0.1 trillion) and group lending for new apartment subscription (up KRW0.7 trillion) all increased. Other types of loans fell KRW1.1 trillion due to a drop in credit loans (down KRW0.9 trillion). The growth of mortgage loans in the banking sector seems to be caused by rising supply of special Bogeumjari Loan for non-speculative homebuyers and housing transactions rebounding in certain areas. However, as the volume of housing transactions is yet to bounce back to the level seen in previous years and with a significant number of mortgage borrowers taking out loans to return jeonse deposit money or for living expenses, the current pace of growth in home mortgage loans is not at an alarming level as to cause overheated speculation in the housing market. Nonbanks saw a drop of KRW2.4 trillion in household loans with a slight increase in th
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Jul 06, 2023
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Jul 05, 2023
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Jul 05, 2023
- FSC Identifies D-SIBs and D-SIFIs for 2024
- The Financial Services Commission identified five bank holding companies (BHCs) and five banks as domestic systemically important banks (D-SIBs) for 2024 on July 5: KB Financial Group, Shinhan Financial Group, Hana Financial Group, Woori Financial Group, NH Financial Group, KB Kookmin Bank, Shinhan Bank, Woori Bank, KEB Hana Bank and NH Bank. Those identified as D-SIBs are required to set aside an additional common equity capital of 1.0%, and the higher loss absorbency requirement will take effect on January 1, 2024. The FSC identifies D-SIBs every year in accordance with assessment criteria recommended by the Basel Committee on Banking Supervision (BCBS). Meanwhile, the FSC also identifies D-SIBs as domestic systemically important financial institutions (D-SIFIs) under the amended Act on the Structural Improvement of the Financial Industry. D-SIFIs are required to prepare and submit their own recovery plans to the Financial Supervisory Service (FSS) within three months from the day of being designated as a D-SIFI. * Please refer to the attached file for details.
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Jul 05, 2023
- Financial Authorities to Promote Fair and Effective Competition in Banking Sector
- The Financial Services Commission and the Financial Supervisory Service held a meeting with bank holding companies on July 5 and announced a set of measures intended to promote competition in the banking sector. The measures have been prepared after holding a series of taskforce meetings on improving the management and operating practices of banks since February this year. The key banking sector reform areas include (a) promoting competition and overhauling the industrial structure, (b) improving the interest rate system through expanded availability of fixed interest rates, (c) enhancing loss absorbing capacity, (d) increasing the proportion of non-interest revenues, (e) improving the employee remuneration system and the shareholder return policy and (f) promoting corporate social responsibility. At the beginning of the meeting, FSC Chairman Kim Joo-hyun delivered opening remarks emphasizing the need to promote fair and effective competition in the banking sector. The following is a summary of Chairman Kims remarks. Over the past four months since the end of February, the FSC and the FSS have been preparing reform measures together with private sector experts, financial industry officials and research institutions on the six key task items concerning how to improve the management and operating practices of banks. Due to the oligopolistic nature of the banking industry, there has been a widely held view among the public that banks are reluctant to make changes despite their easy profitmaking structure. Therefore, the main purpose of the reform measures prepared by the taskforce is to promote fair and effective competition in the banking sectorbut more importantly, competition driven by market forces. Authorities will work to bring about fair competition by requiring banks to provide adequate information about their business operation and products to the market so that consumers can make inform decisions. The purpose of creating an online loan transfer system introdu
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Jun 30, 2023
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Jun 30, 2023
- Government to Ensure Virtual Asset User Protection, Transaction Transparency and Market Discipline
- The Financial Services Commission announced that the Act on the Protection of Virtual Asset Users (the Act hereinafter) was passed at the National Assemblys plenary session on June 30. The newly established law on virtual assets is aimed at guaranteeing protection of assets held by virtual asset users, regulating unfair transaction activities in the virtual asset market and conferring the market oversight and sanctions authority to the FSC. Virtual asset service providers have been regulated under the revised Act on Reporting and Using Specified Financial Transaction Information since March 2021. However, the current regulatory framework had limits where authorities are not able to actively respond to various types of unfair transaction activities, prevent damages incurred to the users of virtual assets and more effectively supervise and sanction VASPs and assist victims with relief measures. Since the onset of this administration, the government has put forward establishing the infrastructure and regulatory framework on digital assets as a key policy agenda and has been supporting the relevant legislative process at the National Assembly. In August 2022, a private-public joint taskforce on digital assets was launched which established the following principles on the direction of creating a virtual asset regulatory framework(a) working on a gradual and phase-by-phase introduction of regulations, (b) applying same regulations on the same service and same risk and (c) ensuring global regulatory consistency with major economies and international organizations. On April 25 this year, given the urgency of protecting virtual asset users, the legislative subcommittee of the National Policy Committee at the National Assembly decided to go ahead with an enactment of the least necessary regulatory measures. Then, a legislative bill integrating nineteen previously pending bills was prepared and passed at the plenary session of the National Assembly on June 30. First, the Act e
