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Sep 16, 2020
- Financial Groups to Provide Integrated Disclosures
- The FSC announced the availability of integrated disclosures by financial groups on September 16. Pursuant to the best practice guidelines on the supervision of financial conglomerates, financial groups will begin to disclose information on 25 specific criteria including their management status, governance structure and capital adequacy requirements through a group-wide integrated disclosure format starting from the end of September this year.KEY DETAILS(DISCLOSURE INFORMATION) Financial groups are required to disclose information on 8 specific areas and 25 sub-categories as follows—(a) general management status, (b) corporate governance structure, (c) internal control, (d) risk management, (e) capital adequacy requirements, (f) internal transaction, (g) capital or credit extension to major shareholders and (h) other relevant information.(PERIOD) Quarterly disclosures are due within three months prior to the end of every quarter and annual disclosures are due within five months and fifteen days from the end of every fourth quarter.(HOW TO ACCESS) A major representative company of the financial conglomerate will put up group-wide integrated disclosure information on its website after gathering and confirming disclosure information from the group’s subsidiaries.EXPECTATIONWith the availability of information on group-wide risk factors and risk management status in an easily understandable format, the newly introduced integrated disclosures by financial groups will provide useful information to consumers and investors while boosting risk management capabilities of financial companies through market-based approaches. Meanwhile, the government will continue to work for the enactment of the legislation on the supervision of financial conglomerates.* Please refer to the attached PDF for details.
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Sep 15, 2020
- Government Announces Improvements to Emergency Loan Program for Small Merchants
- Vice Chairman Sohn Byungdoo presided over the 21st financial risk assessment meeting via teleconference on September 15, and discussed COVID-19 emergency support measures and follow-up plans for the Korean New Deal fund.The following is a summary of Vice Chairman Sohn’s remarks.(EMERGENCY SUPPORT) The government announced last Thursday its plans to make available a new round of emergency support for small merchants and SMEs to help them with the impact of the COVID-19 resurgence. The first round emergency loan program for small merchants provided support to about 540,000 businesses. With regard to the second round emergency loan program for small merchants, the government will double the individual loan cap from KRW10 million to KRW20 million and allow first round support recipients to be eligible for second round emergency loans as well. Accordingly, the first round support recipients within KRW30 million may apply for second round emergency loans starting from September 23. For SMEs, the government will make available KRW2.5 trillion in additional lending support through preferential credit loans and expand P-CBO issuance available for each business entity and sector.Local banks and the Korea Credit Guarantee Fund should take measures to ensure that their IT systems are ready for processing changes in the second round emergency loan program for small merchants, which will take effect from September 23. With approximately 500,000 small merchants expected to be eligible for this program, lending institutions should also focus on virus prevention measures.(K-NEW DEAL FUND) The government will work on follow-up measures for the launching of the Korean New Deal fund. To this end, a working group will be set up this week led by the Korea Development Bank and Korea Growth Investment Corporation to come up with operational guidelines and specific plans. Within September, the government will establish a guideline for K-New Deal investment, which will specifically designa
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Sep 10, 2020
- FSC Holds 1st Consultative Body Meeting on Digital Finance
- The FSC launched a public-private joint consultative body on digital finance, composed of leaders and experts representing financial sectors, big techs, fintechs and major financial labor unions, and held a kick-off meeting on digital finance via teleconference on September 10.The joint consultative body has been set up to tackle diverse challenges arising from the era of digital finance and offer balanced perspectives and solutions. The consultative body will operate four thematic working groups on (i) big tech-fintech relations, (ii) rules and regulations, (iii) financial data security and (iv) financial consumer protection.During the meeting, Vice Chairman Sohn Byungdoo spoke about the need to (i) continue regulatory reforms to promote innovation in financial services, (ii) build a fair competition environment for market participants, (iii) ensure consumer safety in digital finance, (iv) review risk factors related to financial market stability and (v) evaluate the impact of digital transformation on the society as a whole.The participants agreed on the need to have ongoing discussions on how to further develop the traditional financial industry and to promote close cooperation and win-win strategy between financial enterprises and digital platform businesses including fintechs.The joint consultative body will hold meetings regularly throughout this year and make its findings available to the public.* Please refer to the attached PDF for details.
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Sep 09, 2020
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Sep 09, 2020
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Sep 08, 2020
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Sep 03, 2020
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Sep 02, 2020
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Sep 01, 2020
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Aug 27, 2020
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Aug 27, 2020
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Aug 27, 2020
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Aug 26, 2020
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Aug 26, 2020
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Aug 25, 2020
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Aug 24, 2020
- Vice Chairman Discusses Preemptive Responses to Potential Risks amid Growing Uncertainty
- Vice Chairman Sohn Byungdoo presided over the 18th financial risk assessment meeting on August 24 to review market conditions and monitor the progress in implementing the COVID-19 financial support.The following is a summary of Vice Chairman Sohn’s remarks.(CURRENT MARKET SITUATION) The government’s effective response to Covid-19 and aggressive financial support have helped to maintain stability in financial markets. The KOSPI has recovered to pre-crisis levels, gaining 58.1 percent from its lowest in mid-March. Corporate bond and short-term money markets also have shown signs of overall recovery, although some low-rated companies still face difficulties in securing funds. However, the government should remain vigilant as the recent resurgence of Covid-19 cases heightens uncertainty in financial markets and the real economy. In response to the possibility of a protracted pandemic crisis, the government will closely monitor risk factors and take preemptive measures when necessary.(FINANCIAL MARKET MONITORING) With low interest rates, funds searching for higher returns have been increasingly flowing into stock and property markets, prompting a surge in asset prices. As the concentration of funds to certain assets along with growing debt could pose potential risks to financial markets, the government has been closely monitoring market activities.For the stock market to grow into a sustainable and attractive investment destination, the government needs to ensure the sound operation of the market and encourage more listings of promising companies. To this end, the government will come up with comprehensive measures for prevention, investigation and punishment to root out unfair transactions such as market manipulation, while improving regulations to help channel more funds into innovative businesses with long-term perspectives.(IMPLEMENTATION OF HOUSING MARKET MEASURES) The government has taken a series of measures to curb speculative demand in housing markets, while
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Aug 20, 2020
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Aug 19, 2020
- Vice Chairman Speaks about Importance of Maintaining Lending Support by Financial Institutions
- Vice Chairman Sohn Byungdoo presided over the 17th financial risk assessment meeting on August 19 to review market conditions and monitor the progress in implementing the COVID-19 financial support programs.The following is a summary of Vice Chairman Sohn’s remarks.(CURRENT PANDEMIC SITUATION) In response to the recent spike in the number of COVID-19 infections, the government has reinstated the level-2 social distancing measures today. Preventing further waves of infection remains the most urgent task. A successful economic turnaround achieved from earlier this year was made possible through effective K-quarantine measures. In order to maintain the recovery momentum, financial institutions should closely follow the enhanced K-quarantine guidelines within their workplace.(FINANCIAL RELIEF FOR TORRENTIAL RAIN VICTIMS) The longest recorded monsoon this year (54 days) has incurred heavy damages to households and businesses. The victims of torrential rains face extra hardship amid the pandemic-related economic disruptions. In order to help the businesses and households hit by heavy rains, the government will operate one-stop financial support centers throughout the affected regions and make prompt and targeted assistance available.(STRONG LENDING SUPPORT AMID PROTRACTED PANDEMIC SITUATION) As there are concerns about a protracted pandemic situation, the government will work to finalize its decisions on whether to extend the temporary relief measures, such as loan maturity extensions, deferral of interest payments and some of the temporary deregulatory measures, within August. In an economic downturn, individual financial institutions may become passive in lending. However, each institution’s “own actions can collectively influence the overall risk in the system,” as there is a danger of a fallacy of composition suggested by a BIS report in April. Thus, it is necessary to continue to encourage all financial institutions to support lending in order to maintain the
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Aug 13, 2020
- Green Finance Task Force Holds Kick-off Meeting
- Vice Chairman Sohn Byungdoo presided over a kick-off meeting of the green finance task force on August 13. The task force will work to establish a monitoring system for financial risks emanating from climate change, boost investment in green industries and consider the possibility of joining international networks on green finance.The following is a summary of Vice Chairman Sohn’s remarks.(GREEN SWAN) In January this year, the BIS introduced the concept of the ‘Green Swan,’ warning about the possibility of financial crisis caused by climate change. In the BIS report, the threat of climate change is characterized by unpredictability, severe ripple effects and extensive negative externalities. As such, major countries and international organizations have come to understand the threat of climate change to the financial sector. In July 2017, the FSB Task Force on Climate-related Financial Disclosures made recommendations to help companies disclose climate-related financial risks, and in December of the same year, the Network for Greening the Financial System was launched by central banks and regulators from major economies.(PROACTIVE MANAGEMENT) Climate change can threaten the stability of the financial system in many different ways. There are physical risks that financial institutions may face as physical damages caused by climate change can have ripple effects through insurance, loans and investment. In addition, there are transition risks that can have negative effects on the stability of the financial system as a transition to low carbon economy can lead to an abrupt fall of carbon intensive industries. In this regard, the government will strengthen its efforts to monitor and identify climate change risks to maintain stability in the financial system.Financial institutions should also consider taking into account the environmental, social and governance factors alongside the traditional risk factors such as credit or liquidity risks for their asset management.
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Aug 12, 2020
- FSC Chairman Meets with Heads of Financial Associations and Urges Close Cooperation
- FSC Chairman Eun Sung-soo met with heads of financial associations on August 12, and held talks on the progress of the COVID-19 emergency financial support, ways to promote big techs’ entrance into the financial services industry while ensuring a framework of fair competition and the role of finance in the government’s new deal initiative and the post-pandemic economy. The following is a summary of Chairman Eun’s remarks.The pandemic-induced economic shock was effectively minimized thanks to swift provision of relief programs including maturity extensions and deferral of interest payments by financial institutions. As there are concerns over a protracted pandemic crisis, financial institutions should work to bolster their loan loss provisions and the management of financial soundness.With regard to the big techs’ entrance into the financial services industry, the financial authorities plan to set up a public-private joint consultative body made up of the government, financial institutions, big tech companies along with academia and consumer experts to facilitate discussions on the issues related to fair competition, systemic risks and consumer protection.The post-pandemic era presents both opportunities and challenges, requiring coordinated actions from the financial industry. The government’s new deal initiative aims to transform the Korean economy from a fast follower to an innovative leader. In this regard, the role of the financial industry is crucial in achieving that goal.Financial institutions should be adequately informed about the relevant measures concerning the government’s housing market stabilization policy. The financial authorities will continue to keep a close eye on violations in lending practices to prevent market disturbances.Chairman Eun also expressed his gratitude to financial companies making contributions for victims of torrential rains and urged prompt implementation of financial support to the affected households and businesses,
