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Sep 13, 2023
- Government Holds Meeting on Household Debt and Introduces Measures to Strengthen Management
- The Financial Services Commission held a meeting to discuss the current household debt situation with officials from the relevant government ministries and organizations on September 13 and announced a set of measures aimed at strengthening management of household debt growth. With the volume of housing transactions recovering in July-August, the balance of household debt also continued to expand, led by mortgage loans in the banking sector. Especially, in July-August, the heightened competition between banks to introduce 50-year mortgage loans, in effect, pushed up the growth pattern. Under the current situation, 50-year mortgage loans can be utilized to circumvent the debt service ratio (DSR) rule by borrowers, and excessive lending or speculation in the property sector can potentially exacerbate the risk of household debt. As such, the authorities at the meeting agreed on the need to more closely manage and avert potential risks from long-term mortgage loans. Moreover, with regard to the issuance of special Bogeumjari loan, the pace of application has largely declined with upward adjustment of interest rates taking place in July-August. On special Bogeumjari loan, the authorities shared the same view that the availability of policy lending support through the remaining capacity of special Bogeumjari loan should focus on lower income households and non-speculative homebuyers. Strengthening Management of Household Lending in Banking Sector The government plans to take prompt measures to ensure that long-term mortgage loans (with 40-yr or 50-yr maturity) are not being utilized as a means of bypassing loan regulations. The authorities will ensure that banks are strictly following the principle of lending within the borrowers repayment capability and strengthen rules on debt service ratio (DSR) to prevent banks from engaging in loose management of household loan issuance, especially in their handling of 50-year mortgage loans. To this end, first, the authorities will
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Sep 13, 2023
- Household Loans, August 2023
- The outstanding balance of household loans across all financial sectors rose KRW6.2 trillion in August 2023 (preliminary), going up for the fifth consecutive month. Compared to the same month of the previous year, household loans dropped 0.5 percent. * Change (in trillion KRW): -5.1 (Feb 2023), -5.1 (Mar), +0.2 (Apr), +2.8 (May), +3.5 (Jun), +5.3 (Jul), +6.2 (Aug) (By Type) Home mortgage loans continued to grow but other types of loans fell at a greater pace. Mortgage loans rose KRW6.6 trillion overall with a drop of KRW0.4 trillion in the nonbanking sector and an increase of KRW7.0 trillion in the banking sector. Other types of loans decreased KRW0.4 trillion as banks and nonbanks both saw drops of KRW0.1 trillion and KRW0.3 trillion, respectively. sector. Banks saw a rise of KRW6.9 trillion of household loans in August, an increase for five straight months. Home mortgage loans went up KRW7.0 trillion in the banking sector, despite a fall of KRW0.1 trillion in jeonse loans, as individual mortgage loans (up KRW4.1 trillion), policy mortgage loans (up KRW2.7 trillion) and group lending for new apartment subscription (up KRW0.2 trillion) all went up. Other types of loans dropped KRW0.1 trillion as credit loans grew (up KRW0.03 trillion) at a slower pace. Household loans in the nonbanking sector declined KRW0.7 trillion overall. Insurance companies and specialized credit finance businesses saw increases of KRW0.3 trillion and KRW0.6 trillion, respectively, while mutual finance companies and savings banks saw drops of KRW1.5 trillion and KRW0.1 trillion, respectively. Household loans continued to grow in August led by home mortgage loans in the banking sector. By encouraging lenders to carry out credit evaluation based on individual borrowers payment capability and conducting on-site inspections on banks household loans, the authorities will work to ensure stable management of household loans throughout the second half of this year. * Please refer to the attached file f
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Sep 11, 2023
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Sep 08, 2023
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Sep 06, 2023
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Sep 05, 2023
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Aug 31, 2023
- Enhanced Transparency and Investor Protection Measures on CFD Transactions to Take Effect from September
- The Financial Services Commission announced that a set of improvements to the rules on contract for difference (CFD) trading will take effect from September 1. The improvement measures include (a) provision of more transparent investment information to investors, (b) resolving the issue of regulatory arbitrage vis--vis credit loans and (c) strengthening protection for retail investors. First, from September 1, information about the actual investor type (individual, institution or foreign investor) will be displayed and provided on Korea Exchange (KRX)s trade data system (data.krx.co.kr) for CFD transactions. In addition, as in the case with credit loan balance, from September 1, CFD balances will be disclosed to enable the use of these data as a reference for investment. The overall CFD balance can be found on a website (freesis.kofia.or.kr) operated by the Korea Financial Investment Association. Meanwhile, information about CFD balances by item will be ready for viewing on HTS (home trading system) and MTS (mobile trading system) within September as each securities firm needs to finish up preparing relevant data network system. Second, there are stronger investor protection measures taking effect from September 1. As a new over-the-counter (OTC) derivatives investment requirement, for CFD transactions, retail investors need to be verified of having sufficient investment experience by securities firms. Retail investors need to show that they have maintained a monthly average balance of KRW300 million or more for one year or more within the past five years for transactions of equity stocks, derivatives products or highly complex derivatives-linked securities. In addition, retail investors applying to attain the status of a qualified professional investor will need to go through an in-person verification process (including video call) conducted by a securities firm. Third, CFD traders will need to deposit at least 40 percent of the amount of CFD trading as a requireme
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Aug 30, 2023
- 2023 Korea Fintech Week Begins
- Koreas annual global fintech expo, 2023 Korea Fintech Week, will be held for three days from August 30 to September 1 with domestic fintech firms, financial companies, relevant organizations and foreign governments and institutions joining at Dongdaemun Design Plaza (DDP) in Seoul. The three-day (Aug 30 to Sep 1) fintech expo this year is the largest ever in its scale featuring a variety of exhibition halls as well as seminars and educational and experiential programs under the theme of the new wave of fintech. During the opening ceremony, Vice Chairman Kim So-young of the Financial Services Commission delivered welcoming remarks in which he emphasized the need to revitalize the fintech industry to propel innovation and continuous growth of the fintech industry. In this regard, Vice Chairman Kim laid out three key policy directions to support the fintech industry. First, the government will strengthen support for fintech firms business expansion to overseas markets. Second, the government will facilitate more cooperation between financial companies and fintech businesses. Third, the government will reform fintech regulations to make them more reasonable to ensure that fintech businesses are able to take advantage of new technologies and drive innovation. At the same time, Vice Chairman Kim said that the government will directly engage and communicate with fintech enterprises and make sure that a variety of assistance is available on the ground so that our fintech industry can continue to grow amid digital transformation. Following the opening ceremony, a memorandum of understanding (MOU) signing event was held between financial companies, big tech platform businesses and Korea Growth Investment Corporation for establishing a second batch of fintech innovation fund in the amount of KRW500 billion for four years (2024-2027). After the opening ceremony featuring speeches by notable dignitaries, a policy briefing session is scheduled to be held during which visitors can
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Aug 29, 2023
- FSC Announces Current Status in Effort to Soft-land Loan Forbearance Measures for SMEs and Small Merchants
- The Financial Services Commission announced current situation regarding the effort to soft-land the loan forbearance measures put in place for SMEs and small merchants that have been hit by COVID-19 on August 29. The maturity extension and payment deferment programs introduced in April 2020 in the wake of the COVID-19 pandemic have been extended for six months each time until now, and the loan forbearance programs are currently operating under the 5th extension plan announced in September 2022. Key details of the support measures under the 5th extension plan are as follows. First, borrowers on the maturity extension program can continue to get support in accordance with their current loan maturity structure (for six months or one year) until September 2025 without worrying about whether they will still be eligible for support. Second, borrowers on the payment deferment program can get support until September 2023, and they will draw up their debt payment plans in consultation with lending institutions. In accordance with their debt service plans, these borrowers will be able to spread out making payments for both principal and interests for up to 60 months (five years) until September 2028. A maximum one year of grace period can be granted on the amount of deferred interest payments. The number of borrowers as well as the total amount of outstanding loan balance subject to the maturity extension and payment deferment programs has been declining steadily. At the end of September 2022, there were about 430,000 borrowers with some KRW100 trillion in loan balance on the programs, but the numbers declined to 390,000 borrowers with KRW85 trillion by the end of March 2023 and KRW350,000 borrowers with KRW76 trillion by the end of June 2023. Compared to September 2022, by June 2023, there were about 80,000 less borrowers using the programs with a drop of about KRW24 trillion in the amount of loan balance, showing a drop of 20 percent and 24 percent, respectively. About KRW1
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Aug 21, 2023
- 2023 Korea Fintech Week to Kick Off August 30
- The annual global fintech expo, 2023 Korea Fintech Week, will kick off on August 30 with domestic fintech firms, financial companies, relevant organizations and foreign governments and institutions joining at Dongdaemun Design Plaza (DDP) in Seoul. The three-day (Aug 30 to Sep 1) fintech expo will be the largest ever in its scale featuring a variety of exhibition halls as well as seminars and educational and experiential programs under the theme of the new wave of fintech. After an opening ceremony featuring speeches by notable dignitaries, a policy briefing session is scheduled to be held during which visitors can learn about the Korean governments fintech policies as well as relevant fintech support programs made available by regional government bodies. Twelve different themed seminars are scheduled throughout the three-day expo period, inviting fintech experts and related organizations to have in-depth discussions about some of the most trending issues in fintech, such as payments, security, data usage, collaboration with a financial company and entering overseas markets. In particular, a joint fintech session with major international organizations (WB, EBRD, UNIDO and IFC) will provide an invaluable opportunity for visitors to get insights into global fintech trends and future development of the industry as the seminar will deal with the topics such as fintech and the future finance and linking sustainable development and fintech. There will be 82 exhibition booths organized into the fintech hall, financial hall, cooperating organizations hall and global exhibitor hall, showcasing innovative technologies and products from 107 businesses and organizations, which is the largest scale ever in terms of the number of on-site exhibition booths. A variety of helpful programs and events including global fintech: spoken by foreigners, fintech connecting day, fintech idea contest and fintech company IR pitching day as well as fintech job mentoring and career consulting wi
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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
