The Financial Services Commission announced that a partial revision bill of the Enforcement Decree of the Banking Act was approved by the government at a cabinet meeting held on August 14. This partial revision bill has been prepared to specify the details pertaining to the implementation of the revised Banking Act, which is scheduled to take effect from September 22.
First, the partial revision bill of the Enforcement Decree of the Banking Act establishes a specific standard for when a bank should get authorization from the FSC if it chooses to close down or transfers or acquires a “major part” of its business operation. The “major part” of a bank’s business operation is determined as a part of business constituting 10/100 or more of the bank’s total assets or operating profits. In addition, considering that the transfer of a part of a business is in essence same as the closure of a part of a business, under this partial revision bill, banks are subject to get FSC’s authorization when transferring a “major part” of a business constituting 10/100 or more of the bank’s total assets or operating profits. For the acquisition of banking business, on top of the aforementioned standard of assets and operating profits, the partial revision bill will subject banks to get FSC’s authorization when the amount of debt acquiring is 10/100 or more of the acquiring enterprise’s total debt.
The partial revision bill also contains a provision that specifically sets the minimum amount (KRW10 billion) for loans and payment guarantees extended by an enterprise to a bank for which the bank is required to report at its general shareholders’ meeting about certain criteria such as the status of the enterprise whose debt has been restructured in a given fiscal year and the details concerning its debt restructuring history. For failure to comply with this reporting duty, the partial revision bill specifically sets the maximum amount of administrative fine that can be imposed on a bank as up to KRW30 million.
This revision bill will go into effect along with the revised Banking Act on September 22, 2023.
* Please refer to the attached file for details.