-
Feb 14, 2024
- Household Loans, January 2024
- In January 2024, the outstanding balance of household loans across all financial sectors edged up KRW0.8 trillion (preliminary), a growth of KRW0.6 trillion from the previous month (up KRW0.2 trillion). * Change (in trillion KRW, y-o-y): +6.1 (Aug 2023), +2.4 (Sep), +6.2 (Oct), +2.6 (Nov), +0.2 (Dec), +0.8 (Jan 2024p) (By Type) Home mortgage loans increased KRW4.1 trillion, edging up at a slightly slower rate than the previous month (up KRW5.0 trillion). Mortgage loans from banks rose at a somewhat slower rate (from up KRW5.1 trillion a month before to up KRW4.9 trillion in January 2024). Mortgage loans from nonbanks fell at a faster rate (from down KRW0.1 trillion a month before to down KRW0.8 trillion in January 2024). Other types of loans dropped KRW3.3 trillion. (By Sector) Household loans grew at a somewhat faster rate in the banking sector, while falling at a slower rate in the nonbanking sector. Banks saw a rise of KRW3.4 trillion in January 2024, up from KRW3.1 trillion a month ago. Home mortgage loans from banks grew KRW4.9 trillion, a slowdown from KRW5.1 trillion a month before, due mainly to a significant drop in the issuance of new policy mortgage loans. Other types of loans from banks dropped KRW1.5 trillion, declining at a slower rate than the previous month (down KRW2.0 trillion). Household loans from nonbanks fell KRW2.6 trillion, declining at a slower rate compared to the previous month (down KRW2.9 trillion). Mutual finance businesses and insurance companies saw drops of KRW2.5 trillion and KRW0.5 trillion, respectively, while specialized credit finance businesses and savings banks saw increases of KRW0.4 trillion and KRW0.1 trillion, respectively. (Assessment) Since the level of growth in January 2024 is about a quarter of the monthly average in the second half of last year, the pace of household loan growth remains at a stable level. However, as there are possibilities for changes in the future, financial authorities will keep close tabs on hous
-
Feb 14, 2024
- Authorities Meet to Discuss ESG Disclosure Standards
- The Financial Services Commission held a meeting with officials from industry groups, investors, related organizations and private sector experts on February 14 to have a discussion on the preparation of domestic disclosure standards for environmental, social and governance (ESG) management. FSC Vice Chairman Kim Soyoung presided over the meeting and delivered opening remarks, outlining trends in global disclosure standards and direction for domestic ESG disclosure standards. The following is a summary of Vice Chairman Kims remarks. Global interest on ESG and sustainable growth has led to the strengthening of ESG policy and regulations in global capital markets. To facilitate domestic firms to more effectively respond to this, the government has been making efforts to support the sustainable growth of our economy and businesses. As a part of this, the FSC had introduced a general direction for pursuing ESG disclosure standards at a taskforce meeting held in October last year. Considering trends in major countries, authorities had agreed to adopt ESG disclosure standards from after 2026 and agreed to consider an exchange filing requirement and an application of a minimum level of sanctions during an early stage. Moreover, authorities had agreed on considering the adoption of climate-related disclosure standards first as there is an international consensus already established on this. ESG disclosure standards are aimed at making sure that information about corporate sustainability practices can be disseminated to investors in a more systematic way, thereby helping to resolve the problem of information asymmetry between companies and investors. Many firms have been filing sustainability reports on a voluntary basis, but the lack of common standards made them difficult for comparison. Therefore, the government has been working with related organizations, such as Korea Accounting Institute, in preparing ESG disclosure standards to be adopted by domestic stock companies.
-
Feb 13, 2024
- FSC Proposes Rules Change Introducing Responsibilities Map to Bolster Internal Control of Financial Companies
- The Financial Services Commission issued a preliminary notice regarding a revision proposal for the enforcement decree of the Act on Corporate Governance of Financial Companies and its supervisory regulation on February 13. In December last year, a partial revision to the Act on Corporate Governance of Financial Companies (the Act hereinafter) was passed by the National Assembly, paving the way for financial companies to adopt responsibilities maps and have their executive officers manage internal control duties in their lines of work. As a follow-up to this, the revised enforcement decree and supervisory regulation being announced today specifically deal with the issues delegated by the Act, such as how to prepare for a responsibilities map and when and how to submit it, as well as details about the internal control oversight duty of chief executive officers. First, the revision proposal deals with specific details concerning how to write and submit responsibilities maps. A responsibilities map should be written with details about the scope of internal control responsibilities of each executive officer demonstrating a well-balanced division of responsibilities. Financial companies will be required to submit responsibilities statements, detailing each executive officers duties and responsibilities, as well as responsibilities diagrams, mapping out responsibilities of their executive officers in relation to one another in a visual manner. The responsibilities maps should be submitted to the financial authority within seven business days from the time of approval from their boards. The term responsibilities refers to the internal control and risk management duties relating to the business operations of a financial company. The business operations of a financial company are categorized into (a) the company-wide oversight functions, such as internal audit, compliance, and risk management, (b) the authorized sales and marketing related functions, such as lending and depo
-
Feb 08, 2024
- FSC to Ensure Thorough Preparation for the Enforcement of the Act on the Protection of Virtual Asset Users
- The Financial Services Commission announced that the Act on the Protection of Virtual Asset Users (the Act hereinafter) will take effect from July 19, 2024. This law was enacted on July 18, 2023 with aims to protect the users of virtual assets and maintain an order in the market. The Act largely deals with (a) protection of assets held by users of virtual assets, (b) prohibition of unfair trading activities in the virtual asset market, and (c) supervision and sanctions authority over virtual asset service providers (VASPs) and related market activities. To provide specific details delegated by the Act, the FSC had prepared an enforcement decree and a supervisory regulation and sought public comment between December 11, 2023 and January 22, 2024. Major details of the current legislative framework on the protection of virtual asset users are as follows. First, VASPs have the duty to safely keep deposits and virtual assets owned by users. Banks have been selected as the sole financial institutions eligible to carry out the handling and custody of user deposits. To ensure safe protection of users assets, VASPs need to keep more than a certain level of users assets in cold wallets (minimum 80 percent of virtual assets economic value). To be prepared for incidents of hacking or computer failure, VASPs need to have a liability insurance or set aside a reserve to be able to meet demands for compensation. In transactions involving virtual assets, the acts of using undisclosed material information, manipulating market prices, and engaging in unfair trading activities are all prohibited and punishable by either a criminal penalty or a penalty surcharge. A criminal sentence of minimum one year of imprisonment or a fine of more than three times and up to five times the amount of unfairly gained profits can be imposed. Violators may face up to a life sentence depending on the amount of unfairly gained profits (if more than KRW5 billion). Imposing a penalty surcharge at double the
-
Feb 07, 2024
- Financial Development Review Committee Meets to Discuss Financial Policy Agenda for 2024
- The Financial Services Commission held this years first financial development review committee meeting on February 7. At todays meeting, seven new members were appointed to the committee, and the authorities discussed key financial policy plans for 2024. Under the vision of a caring and reliable finance, standing by the people, the FSC presented three key policy objectives for this year(a) a credible finance, safeguarding peoples livelihood, (b) a robust finance, capable of withstanding risks, and (c) a dynamic finance, propelling growth into the future. The FSC plans to carry out detailed policy initiatives in nine specific areas to achieve these goals. At the beginning of the meeting, FSC Chairman Kim Joo-hyun said that while successfully dealing with various issues to ensure stability in financial markets, this year, the FSC will particularly focus on boosting the value of our capital markets by introducing a corporate value-up program and making efforts to ensure maintenance of strict market discipline. At the same time, Chairman Kim also pointed out that it is important to seek measures to actively prepare for impending changes in the future. As many experts have suggested, shifting demographic structures, climate change and advancement in technologies are expected to have far-reaching impacts on financial markets. In this regard, Chairman Kim stressed that how we respond in taking up these new challenges will shape the future of our economy. To effectively deal with these challenges, Chairman Kim said that authorities will set up and operate taskforces on demographic, climate and technology issues to more accurately analyze and prepare response strategies. * Please refer to the attached PDF for details.
-
Feb 06, 2024
- FSC Holds Meeting and Announces Plans to Upgrade Rules on Corporate Mergers and Acquisitions
- Vice Chairman Kim Soyoung of the Financial Services Commission presided over a meeting with officials from related organizations and industry groups on February 6 and announced plans to improve rules on corporate mergers and acquisitions (MAs). The measures are aimed at strengthening protection for investors, which will also help to boost regulatory consistency with global standards. At the meeting, Vice Chairman Kim delivered opening remarks, outlining some of the problems observed in the market and policy proposals to address them. The following is a summary of Vice Chairman Kims remarks. Corporate MAs are important mechanisms to promote growth and innovation in a company and boost dynamism in an economy. Securing a competitive edge through MAs has become ever more important when considering recent economic conditions, such as interest rate hikes and global economic slowdown. Meanwhile, MAs are important corporate decisions which can significantly influence the governance structure and share value of a company, and thus are also very important from the perspective of guaranteeing the protection of rights for general shareholders. For this, authorities have worked to ensure that companies get consent from their shareholders when pursuing MAs and to provide sufficient protections for dissenting shareholders. However, in corporate MAs, there continues to be the problem of general shareholders being sidelined, with their voices not being heard enough. In this regard, there have been concerns about the lack of sufficient information available on the reasons for undertaking MAs and their processes as well as important decision-making by boards of directors. At the same time, there have been also complaints about the rigidity in rules concerning the method of calculating merger prices, which have not been able to take into account the corporate restructuring demands of companies in a more autonomous way. To address these issues, in May last year, the FSC announced a set
-
Feb 05, 2024
- FSC and MOIS Sign MOU to Bolster Prudential Supervision on MG Community Credit Cooperatives
- The Financial Services Commission announced that it has signed a memorandum of understanding (MOU) with the Ministry of the Interior and Safety (MOIS) to strengthen cooperation between the two organizations to bolster supervision over MG Community Credit Cooperatives (MGCCC) on February 5. In the wake of large-scale deposit outflows that took place at MGCCC last year, the FSC and the MOIS came to agree on the need to expand the role of financial authorities in carrying out prudential supervision over MGCCC. Shortly thereafter, in December last year, the Financial Supervisory Service (FSS) and the Korea Deposit Insurance Corporation (KDIC) each set up an internal organization tasked with supervising MGCCC. In this regard, todays agreement lays out rules and principles needed to build a stronger cooperative supervisory network between the two organizations. Key details of the agreement are as follows. First, regarding the rules and procedures, the MOIS will decide on MGCCCs prudential management standard in consultation with the FSC and on a par with the prudential standards observed by other types of mutual financial businesses. Second, regarding information sharing, the FSC will be able to regularly and frequently receive information needed to ensure prudential supervision over MGCCC from the MOIS. Third, regarding inspection and post-inspection measure, the MOIS and the FSC will mutually consult with each other in establishing a plan for inspection and deciding on a post-inspection measure. At the MOU signing event, FSC Chairman Kim Joo-hyun pledged to actively cooperate with the MOIS and urged related authorities to make sure a seamless operation of the joint inspection units. The government expects that this agreement will serve as a first step in helping to bolster prudential supervision on MGCCC. * Please refer to the attached PDF for details.
-
Feb 01, 2024
- FSC Proposes Revision to Supervisory Regulation on Electronic Financial Services
- The Financial Services Commission proposed a revision to the supervisory regulation on electronic financial services on February 1. The revision is intended to shift the current regulatory framework from rule-based to principle-based one, allowing more room to make autonomous decisions for financial companies, and bolster the resilience of electronic financial system to disasters and cyberthreats. It has been pointed out that the current framework of the supervisory regulation on electronic financial services, which remained little changed since it was established in 2006, makes it difficult to flexibly respond to evolving security threats and encourage passive responses from financial companies. In particular, there has been a growing need for making financial industrys cybersecurity system more adaptable and resilient in response to technology advances (e.g. artificial intelligence or cloud computing) and evolving cyberthreats. Against this backdrop, the revision proposal is focused on allowing more room for financial companies to make decisions on their own on financial security matters and encouraging them to make more investment in cyber security by making financial security regulations more goal-and-principle oriented. First, the revision proposal reduces the number of rules to 166 from 293 previously to ensure that financial businesses can flexibly respond to new risks. Instead of prescriptive and exhaustive rules, the revised regulations will only present principles and goals and allow financial companies to make decisions on details on their own. For example, the revision proposal abolishes provisions specifying the method of creating users passwords and allows financial companies to adopt their own method of creating passwords and managing authentication system. Second, to bolster cyber resilience against disasters and electronic incidents, the revision proposal introduces requirements for certain types of small- and medium-sized financial companies and el
-
Feb 01, 2024
- FSC Seeks to Bolster Cyber and Information Security Capacity and Resilience of Financial Industry
- The Financial Services Commission held a meeting with relevant authorities and financial companies on February 1 and announced plans to bolster cyber and information security capacity and resilience of the financial industry. At the meeting, authorities also unveiled and discussed key details of the revision proposal for the supervisory regulation on electronic financial services, which is put up for public comment until March 12. Vice Chairman Kim Soyoung of the FSC delivered opening remarks at the meeting, emphasizing on the need to establish a forward-looking cyber and information security system in the financial industry amid rapid changes taking place in digital sphere, such as cloud computing and artificial intelligence, and the evolving nature of cybersecurity threats. In this regard, Vice Chairman Kim said that it is necessary to focus on making financial industrys cybersecurity system more adaptable and resilient. To this end, the FSC will make the cyber and information security system more goal- and principle-oriented and encourage financial companies to boost their own cybersecurity capacity and bolster resilience to cyberthreats. With the revision of the supervisory regulation being proposed today, Vice Chairman Kim said that the approach to cyber and information security will shift from a narrow and compliance-focused practice of the past to a more comprehensive, proactive and self-driven one. Beginning with this rules change, the FSC will seek to revise the Electronic Financial Transactions Act in the future to strengthen financial companies self-governance responsibility over cyber and information security. Some of the key details of the revision proposal for the supervisory regulation on electronic financial service include (a) making rules simpler and allowing more room to make autonomous decisions for financial companies by reducing the number of rules to 166 from 293 previously, (b) requiring certain types of small- and medium-sized financial comp
-
Feb 01, 2024
-
Jan 31, 2024
- FSC Decides on the Method and Procedure for Authorizing a Regional Bank's Transition to Become a Nationwide Operator
- The Financial Services Commission held its second regularly scheduled meeting of the year on January 31 and discussed the method and procedure for authorizing a regional banks transition to become a nationwide operator under the Banking Act. On July 5, 2023, the government announced a plan to promote regional banks business expansion to become nationwide banking business operators as a way to spur competition in the banking industry. Under the current licensing system, all nationwide, regional and internet-only banking businesses need to get authorization from the FSC under the Article 8 of the Banking Act. Although most requirements and procedures are same for authorizing the operation of banking business, there are different requirements for minimum capital and maximum shareholding by a non-financial entity. Nonetheless, the Banking Act currently has no explicit provision on the issue of authorizing a regional banks transition to become a nationwide banking business operator. Some have commented in favor of allowing this through changes in the articles of incorporation for expanding the scope of business operation from a specific geographic region to nationwide. However, as this constitutes a critical matter from the standpoint of supervising financial institutions, the FSC finds it inappropriate to allow the transition from a regional bank to a nationwide banking business operator only through changes in articles of incorporation and without having a proper authorization process. Thus, the financial authorities prepared the following method and procedure for authorizing a regional banks transition to a nationwide operator under the current regulatory framework. First, regarding the method for authorizing a transition of a regional banking business to become a nationwide operator, the FSC will apply a modification of conditions specified under the Article 8 of the Banking Act. A new authorization may be utilized to allow a regional banks transition to become a nat
-
Jan 31, 2024
- Government and Financial Industry Announce Programs to Help Reduce Interest Rate Burden on Small Merchants
- The Financial Services Commission announced that the government and the financial industry will provide interest rate support programs to help small merchants. First, banks will begin to offer refunds on interest payments to small merchants from February 5. A total of KRW1.36 trillion in interest refunds will be given to about 1.87 million small merchants who made interest payments at over 4 percent interest rates in the year of 2023. The amount of refund expected to be given to each small merchant on average is about KRW730,000. There is no need to apply for interest refunds as individual banks will contact small merchants with details. The first round of refunds will take place between February 5 and 8. Combined with the quarterly interest refunds of about KRW0.14 trillion, banks will be able to return about KRW1.5 trillion in interest refunds in total. Aside from this, banks are planning to offer KRW0.6 trillion in support for vulnerable groups, specific plans for which will be finalized at the end of March. Small merchants who borrowed from savings banks, mutual finance unions and specialized credit finance businesses can also receive interest refunds if they have business loans from nonbanks with interest rates between 5 percent and 7 percent. It is expected that about 400,000 individuals will be eligible to receive interest refunds amounting to maximum KRW1.5 million per individual. The nonbanks interest refund program will open in mid-March and begin providing refunds from March 29. Since September 30, 2022, the FSC and Korea Credit Guarantee Fund (KODIT) have been operating a low interest rate refinancing program for small merchants. Through this program, small merchants were able to refinance their business loans at much lower interest rates, switching from about 10.06 percent interest rate previously to 5.48 percent on average. Previously, this program was designed to provide support for switching small business loans that were issued on or before the last
-
Jan 30, 2024
- FSC Holds Meeting and Announces Measures to Upgrade Rules on Treasury Stocks of Listed Companies
- The Financial Services Commission held a meeting with officials from related authorities, industry groups and research organizations on January 30 to discuss and announce measures to improve rules on treasury stocks of listed companies. The authorities prepared the measures after having a policy seminar on this topic in June last year and drawing opinions from various stakeholders and experts. At the meeting, FSC Vice Chairman Kim Soyoung delivered opening remarks, outlining market participants views on Koreas treasury stock system and proposing measures for improvement. The following is a summary of Vice Chairman Kims remarks. Unlike in the U.S. or other advanced markets, treasury shares in Korea have often been utilized for bolstering the control of major shareholders in a company, as opposed to their primary goal of increasing shareholder value. This has been made possible mainly because allocation of new shares is permitted on treasury stocks when companies spin off their business units, so that treasury stocks were used to bolster the control of major shareholders. Moreover, information about treasury stocks has not been made available in the market either in a timely or adequate manner, which presents the potential for damaging the rights and interests of general shareholders. Therefore, to protect the rights and interests of ordinary shareholders in corporate spin-offs, authorities will prohibit allocation of new shares on treasury stocks. In addition, authorities will upgrade rules to ensure a thorough review on the preparation of investor protection measures when a newly established company intends to list on an exchange after the spin-off. In addition, to ensure the provision of transparent information on the acquisition, holding and disposal of treasury stocks, authorities will upgrade rules to require listed companies to disclose in detail when the proportion of their treasury stock holding rises above a certain level and to strengthen disclosure duty fo
-
Jan 26, 2024
- FSC Holds 1st Fintech Open Networking Day
- The Financial Services Commission held the first Fintech Open Networking Day on January 26 with fintech businesses, financial companies and investment firms joining along with related organizations. The event was organized to support networking between fintech businesses, financial companies and investment firms in a more systematic way with the need to expand business-to-business (B2B) collaboration with financial companies and facilitate investment through venture capital. The event also offered one-on-one mentoring and other networking and consulting opportunities to early-stage fintech businesses, which may face difficulties and lack experience in dealing with regulatory issues, expanding their businesses overseas or securing investment. During the event, a memorandum of understanding (MOU) was signed by ten financial holding companies, banks and fintech industry groups and agreed on fostering a more cooperative business environment, expanding support for fintech incubation, investment and overseas expansion, and holding more fintech-focused advertisement and investment activities. At the event, a total of seven financial companies and four investment firms made presentations on the potential areas of collaboration and investment strategies based on each organizations strength. FSC Vice Chairman Kim Soyoung attended the event and delivered congratulatory remarks highlighting the importance of collaboration between diverse players in the fintech ecosystem. In this regard, Vice Chairman Kim said that the government will also make continuous efforts to facilitate a revitalization of the fintech industry. The FSC will hold the Fintech Open Networking Day on a biannual basis and plans to provide more networking opportunities through the annually held Korea Fintech Week (expected to be held in August this year) and a series of meetup events organized throughout the year for financial companies and fintech businesses. * Please refer to the attached PDF for details.
-
Jan 25, 2024
-
Jan 23, 2024
- FSC Announces a Plan to Improve the Soundness of the Convertible Bond Market
- Vice Chairman Kim Soyoung of the Financial Services Commission held a meeting with officials from relevant organizations and industry groups and announced a plan to bolster the soundness of the convertible bond (CB) market on January 23. The measures included in the plan are intended to strengthen rules on disclosure of information on the issuance and distribution of convertible bonds, making improvements to the current refixing rules and procedure, and strengthening investigation over unfair trading activities involving CBs. The FSC expects that these measures will help to address the following three oft-cited problems regarding the CB marketthe lack of transparency in the issuance and circulation of CBs, the arbitrariness in the refixing of convertible prices, and the potential misuse in unfair trading activities. In this regard, the FSC has prepared the following three measures to address these problems, taking into account opinions and suggestions raised during the public seminar held on the topic in last July. First, the disclosure of information about the issuance and circulation of CBs will be strengthened to boost transparency in the market. Authorities will seek to ensure that the types of information that can be critical to the corporate governance structure and share valuation, such as information about the entity designated by the company to exercise the call option and the plan for CB selloff close to maturity, are opened up to the public in a more transparent way. Second, the rules and procedure for refixing convertible prices of CBs will be made more reasonable. Current rules set the minimum level of refixing at 70 percent of the initial convertible price and allow companies to refix convertible prices below the minimum level only in exceptional casese.g. corporate restructuringvia securing a special resolution at a general shareholders meeting or through their articles of incorporation. However, some companies have exploited such exceptions to the ru
-
Jan 18, 2024
- Strengthened Penalties on Unfair Trading Activities in Capital Markets Take Effect from January 19
- The Financial Services Commission announced that the revised Financial Investment Services and Capital Markets Act (FSCMA) and its subordinate statutes will go into effect on January 19. The revision deals with (a) introducing a penalty surcharge system on unfair trading activities, (b) legislating a method for calculating the amount of unfairly gained profits, and (c) providing a leniency to those reporting violations committed by oneself or others. The revised rules were prepared through close consultation and discussion with the Ministry of Justice, the Supreme Prosecutors Office, the Financial Supervisory Service and the Korea Exchange. The authorities expect that the changed rules will help to more effectively detect and prevent unfair trading activities and more strictly apply sanctions on illegitimate activities. First, the revision introduces a penalty surcharge system on unfair trading activities and enables authorities to impose a penalty surcharge of up to twice the amount of unfairly gained profits (maximum KRW4 billion when there is no illicit profit made or it is impossible to calculate an amount). Previously, only criminal penalties were available as a method of sanctioning unfair trading activities, which usually took long time to reach a decision by the court with the strict application of burden of proof. With the introduction of penalty surcharge, a speedier and more effective sanctioning will now be possible on unfair trading activities. In terms of the procedure for imposing a penalty surcharge, in principle, the FSC is able to impose a penalty surcharge after receiving an outcome of investigation from the prosecution service. However, when the matter has been consulted with the prosecution service or if it has been more than a year since the case was first reported to the prosecution service, the FSC is allowed to impose a penalty surcharge even before receiving an investigation outcome from the prosecution service. Second, the revision establi
-
Jan 18, 2024
-
Jan 17, 2024
-
Jan 15, 2024
