FSC Proposes Rules Change on the Maximum Level of Credit Extension Allowed for Foreign SubsidiariesOct 31, 2023

The Financial Services Commission proposed a revision to the supervisory regulation on financial holding companies on October 31, which will be open for public comment from October 31 to November 10, as a follow-up to the previously announced plan to ease rules on overseas subsidiary ownership of financial companies.


Under the current rule, financial companies within a holding group are allowed to extend credit to their own subsidiaries at the maximum level of 10 percent of equity capital to each individual subsidiary. The total sum of credit extended to subsidiaries should not exceed 20 percent of equity capital. However, for financial holding companies’ overseas subsidiaries, which often face challenges in raising funds at an early stage due to low credit background and lack of collateral, this rule on credit extension between financial companies within a holding group has placed restrictions on their ability to raise funds even from their domestic affiliates.


Therefore, this revision proposal will increase the maximum level of credit extension allowed by a financial company to its foreign subsidiary within additional 10 percentage points from the current level for a period of maximum three years from the time the foreign subsidiary becomes a part of the holding group.


This revision proposal will be available for public comment from October 31 to November 10 and go into effect from January 1, 2024 after a deliberation by the FSC.


* Please refer to the attached file for details.