Press Releases - Financial Services Commission

Press Releases

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Apr 10, 2023

Household Loans, March 2023

In March 2023, the outstanding balance of household loansacross all financial sectors declined KRW5.0 trillion, showing a continuing trend of decline. Financial authorities will work to ensure a stable management of household debt and keep close tabs on potential risks that may be caused by high interest rates. (Overall) Household loans across all financial sectors fell KRW5.0 trillion in March 2023. The year-on-year change rate (down 1.4 percent) accelerated somewhat compared to a month ago (down 1.3 percent), showing a continuing trend of decline since the second half of last year. (By Type) Mortgage loans edged up from a decline in the previous month and other types of loans fell at a faster pace. - (Mortgage Loans) Mortgage loans rose KRW1.0 trillion with a grow in the banking sector (up KRW2.3 trillion) and a decline in the nonbanking sector (down KRW1.3 trillion). - (Other Types of Loans) Other types of loans fell KRW6.0 trillion, declining at a faster pace compared to the previous month (down KRW4.7 trillion), led by credit loans (down KRW3.2 trillion). (By Sector) Household loans edged down in both the banking and nonbanking sectors. -(Banking Sector) Household loans in the banking sector fell KRW0.7 trillion in March, declining at a slower pace compared to a month ago (down KRW2.7 trillion). Mortgage loans from banks grew KRW2.3 trillion as the volume of policy mortgage loans increased (up KRW7.4 trillion), but jeonse loans (down KRW2.3 trillion), group lending for new apartment subscription (down KRW0.9 trillion) and general individual mortgage loans (down KRW1.9 trillion) all declined. Other types of loans in the banking sector fell KRW2.9 trillion as credit loans went down KRW2.3 trillion. -(Nonbanking Sector) Nonbanks saw a drop of KRW4.4 trillion in household loans with a slight increase in insurance companies (up KRW0.4 trillion) and declines in mutual finance companies (down KRW4.0 trillion), specialized credit finance companies (down KRW0.4 trillion
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Apr 10, 2023

FSC Proposes Rules Change in the Enforcement Decree of the Banking Act

The FSC gave advance notice on April 10 regarding rules change in the Enforcement Decree of the Banking Act, which will be put up for public comment until May 22. The revision bill establishes a specific standard for when a bank should get authorization from the FSC if it closes down or transfers or acquires a major part of its business operation. It also contains a regulatory modification in agreement with upstream legislation and a penalty clause for a specific type of violation. When Citibank Korea decided to draw back its retail banking operation in 2021, the FSC was not able to proceed with an authorization process since the Banking Act stipulates a banks closure of the entire part of its business as an area where the FSC could deliver authorization. For the closure of a part of the banks business operation, the FSC then saw it unlikely that it could give authorization under the purview of the Banking Act. Nonetheless, given the necessity to protect the rights and interests of consumers, the FSC then gave the order to Citibank Korea to draw up a detailed plan to minimize inconvenience to consumers, protect consumer rights and maintain sound market order and implement its plan faithfully as it was authorized to take such action as prescribed by the Financial Consumer Protection Act. In March 2023, the Banking Act was amended, however, to subject banks to get authorization from the FSC when they close down not only the entire part of their business but a major part of their business operation as well. The amended Banking Act then delegates the authority of determining what constitutes a major part to its Enforcement Decree. Thus, this partial revision proposal for the Enforcement Decree of the Banking Act specifies the major part of the banks business operation to be closed down as a part of business constituting 10/100 or more of the banks assets and total profits. Also, considering that the transfer of a part of a business is in essence same as the closure of a
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Apr 06, 2023

Online Insurance Policy Comparison and Recommendation Service to be Piloted

The FSC introduced measures to allow platform service providers to test operate insurance policy comparison and recommendation service to help enhance consumer benefits and promote competition in the insurance sector. From as early as the end of this year, consumers will be able to compare various insurance policies offered by different insurance companies and receive recommendation on suitable products before signing up at an insurance companys online website of their choosing. Using the insurance policy comparison and recommendation platform service, consumers will be able to sign up for the types of insurance that are most widely used and closely linked to their everyday lives such as indemnity health insurance and auto insurance plans at a more affordable cost. A platform service provider refers to a non-financial company such as a MyData service provider or electronic financial business operator. Currently, the Insurance Business Act only permits employees of insurance companies, insurance agents and insurance planners to engage in solicitation activities. For a platform business to offer insurance policy comparison and recommendation service, it needs to be selected as an innovative financial service provider under the financial regulatory sandbox program. As the entry of platform businesses can have an enormous impact on the operation of insurance companies and insurance agents, with complex interest relationships among them, authorities set up a taskforce consisting of all relevant stakeholders and held meetings throughout between September 2022 and March 2023. Despite early-stage differences in opinions on the issue of whether to permit the availability of auto insurance and about the maximum level of commission, the taskforce participants reached a common ground on the ways to test operate platform services while minimizing the impact on traditional solicitation channels and concerns about anti-competition with consumer benefits placed at the top of priori
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Apr 03, 2023

Call Option and Refixing Rules to be Applied on Convertible Preference Shares

The FSC announced that the same call option and refixing rules currently applied on convertible bonds (CBs) will begin to apply on (redeemable) convertible preference shares issued by listed companies from May 1. As a follow-up to the previously introduced plan to improve the rules on the convertible bond market announced in September last year, the FSC completed revising the regulation on securities issuance and disclosures on March 29. The revised regulation deals with the rules regarding call option and refixing. First, it places a limit on exercising call options by largest shareholders within the level of their initial shareholding proportion at the time of the issuance of (redeemable) convertible preference shares. Also, when a call option is exercised by a third party, the issuing company will be required to disclose that information. Second, the revised regulation contains refixing rules for (redeemable) convertible preference shares issued through private offering by listed companies. This makes it mandatory to set an upward adjustment of convertible price if share prices rise after a downward adjustment of convertible price following a drop in share prices. Along with the previously introduced (Dec. 2021) regulatory improvements on CBs, this regulatory change on (redeemable) convertible preference shares is expected to help prevent cases where these bonds and stocks are utilized as an expedient way for largest shareholders to expand their shareholding status. This regulatory change will take effect from May 1, applicable for (redeemable) convertible preference shares decided to be issued by company boards from then on. The FSC and the FSS will continue to closely examine market situations and seek additional measures to improve the rules on the convertible bond and (redeemable) convertible preference share market. * Please refer to the attached PDF for details.
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Apr 03, 2023

English Disclosures to be Provided by Large Listed Companies from 2024

From 2024, large listed companies will be required to submit English disclosures on material information within three days from filing their regulatory disclosures in Korean at the Korea Exchange (KRX). The FSC and the KRX announced that relevant regulatory revision process has been completed to implement the English disclosure requirement from 2024, as part of the previously announced plan to expand English disclosures in phases which aims to ultimately boost foreign investors accessibility to Korean capital markets. According to this plan, English disclosures on material information will become mandatory for KOSPI-listed companies in two phases (2024-2025 and from 2026) starting with large listed firms. A variety of support programs to promote an expansion of English disclosures will also be made available. The KRXs revised disclosure rules deal with provisions needed to implement the first stage mandatory English disclosures as follows. From 2024, KOSPI-listed firms with assets worth KRW10 trillion or more will be required to submit English disclosures on (a) matters related to closing financial statement, (b) matters concerning important decision-making and (c) matters pertaining to suspension of trading within three days from filing their regulatory disclosures in Korean. Although foreign shareholders make up a large part of Korean capital markets,inadequate provision of information in English has been identified as a problem. Through this plan, authorities expect that English disclosures will be expanded which will help to improve information accessibility for foreign investors and strengthen global competitiveness of Korean capital markets. To facilitate an expansion of English disclosures, the KRX will provide diverse support programs such as offering incentives to businesses that submit outstanding disclosures in English, increasing the availability of translation service provided by professional translation firms and introducing guidelines on English discl
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Mar 29, 2023

Authorities Discuss Measures to Strengthen Loss Absorbing Capacity of Mutual Finance Businesses

The FSC and the FSS held the first mutual finance policy council meeting of this year with relevant government authoritiesand mutual finance business representativeson March 29. At the meeting, authorities analyzed the mutual finance businesses level of exposure to the real estate sector and discussed ways to strengthen their loss absorbing capacity. Key Discussion Details With the recent increase in the volume of real estate-related loans issued in the mutual finance sector and the rise in debt overdue ratio, authorities discussed current situations and ways to bolster prudential management of mutual finance businesses. In this regard, authorities proposed raising the loan loss reserve requirement on mutual finance businesses from the current level of 100 percent to 130 percent for loans extended to real estate and construction sectors in order to improve their loss absorbing capacity. To increase the level of effectiveness in the governments policy measures regarding real estate project finance (PF), authorities plan to seek submission of monthly reports on all mutual finance businesses real estate PF sites to ensure prompt sharing of information in the event of a default risk. Moreover, authorities had discussions on unifying current disparities existing between the external audit requirements of different mutual finance sectors by making them all subject to external audit on an annual basis. The mutual finance policy council also discussed ways to strengthen internal control standards of mutual finance businesses. Further Plan Authorities will gather comments on specific improvement measures from relevant ministries and mutual financial businesses until April and seek revision of related laws thereafter. * Please refer to the attached PDF for details.
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Mar 27, 2023

Application of Temporarily Eased Financial Regulations to be Available until June 2023

The FSC held a meeting with the FSS and financial industry associations on March 27 to check financial market conditions and the liquidity and soundness conditions of financial institutions and discussed extending the availability of temporarily eased financial regulations put in place since October last year. Temporary Market Stabilization Measures Expiration Schedule (Oct. 2022~) a) Banks: Postponement of normalization of liquidity coverage ratio (LCR) (92.5%, until end-June 2023), temporary easing of loan-to-deposit ratio (105%, until end-April 2023) b) Insurance companies: Temporary easing of cap on borrowing from retirement pension special accounts (until end-March 2023) c) Savings banks: Temporary easing of loan-to-deposit ratio (110%, until end-April 2023) d) Specialized credit finance businesses: Temporary easing of KRW-based currency liquidity ratio by 10%p (until end-March 2023), temporary easing of the creditable assets to real estate project finance exposure ratio by 10%p (until end-March 2023) e) Financial investment businesses: Postponement on downsizing (from 12% to 8%) the cap on the amount of bonds (issued by specialized credit finance businesses) that can be included when hedging risks associated with equity-linked securities (ELS) under management (until end-March 2023), easing of net capital ratio risk weight when purchasing project finance asset-backed commercial papers (PF-ABCPs) guaranteed by own company (until end-June 2023) f) Financial holding companies: Easing of cap on credit extension between their own subsidiaries (until end-June 2023) Extended Availability of Eased Regulations With regard to the temporary easing of financial regulations applied since October last year on banks, insurance companies, savings banks, specialized credit finance businesses and financial investment firms, considering that there are lingering uncertainties in financial markets at home and abroad, authorities decided to extend the availability of deregulatory m
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Mar 23, 2023

4th Working Group Meeting Held on Improving Management, Operating Practices of Banks and Banking System

The FSC and the FSS held the 4th working group meetingof the taskforce on improving the management and operating practices of banks and banking system on March 22, chaired by FSC Vice Chairman Kim So-young. Details of 4th Working Group Meeting Discussions First, participants discussed the recent progress and future plan for online deposit product brokerage service, which is aimed at enhancing consumer benefits and boosting competition in the banking sector. Financial authorities announced that the online deposit product brokerage service offered by nine companies that were selected as innovative financial service providers in November 2022 will be launched in June this year and that the authorities plan to provide support to ensure their seamless launch. Also, at the end of May, authorities plan to have another screening session for more than ten companies that submitted applications to be selected as innovative financial service providers to allow more diversity in the availability of relevant service platforms. Based on the result of pilot operation, authorities plan to consider whether to make online deposit product brokerage services official in 2024. In particular, when seeking to make it official, authorities plan to look into ways to include checking accounts as well as ways to expand the subscription limit within the boundaries in which excessive money moves can be avoided. In this regard, participants expressed high hopes for the benefits of online deposit brokerage services, particularly in connection with MyData services. A participant talked about the importance of ensuring fairness in algorithms to enable appropriate recommendation of deposit products, and that the service fee levels need to be set appropriately so as not to transfer deposit brokerage service fees to consumers. Another participant raised a concern about excessive money moves as consumers become more sensitive to interest rates, and said that there needs to be upper limits for subscripti
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Mar 20, 2023

KoFIU Unveils H2 2022 Survey Result on Virtual Asset Service Providers

The Korea Financial Intelligence Unit (KoFIU) conducted a survey on 36 registered virtual asset service providers (VASPs) in order to ascertain the current state of the domestic virtual asset market. Survey Overview (Respondents) 36 VASPs (27 exchange service providers and 9 other businesses) (Survey Method) Data collected from VASPs by paper surveys (Period Covered) July 1, 2022 to December 31, 2022 Key Survey Findings for H2 2022 The domestic market for virtual assets in H2 2022 was downsized significantly compared to that of H1 2022 in terms of market capitalization, trading volume, operating profits, etc.This seems to be caused by a contraction in the real economy due to interest rate and price hikes, as well as a decline in confidence following the Luna crash and the collapse of FTX. According to the survey, the amount of deposits in KRW and the number of users, which show potential investment demands in the future, both declined. Investment in the global top ten virtual assets, such as Bitcoin, handled by the KRW-based exchange service providers increased from 46 percent in H1 2022 to 57 percent in H2 2022 (up about 11 percentage points), which is greater than that in non-mainstream virtual assets. New listing of virtual assets also dropped significantly by about 72 percent compared to H1 2022, showing a tendency of VASPs conducting their operations more conservatively following the Terra-Luna crash. The newly analyzed items in the H2 2022 survey include the reason for suspending transaction (delisting of a virtual asset) and the VASPs compliance status with the travel rule.In H2 2022, the most prevalent reasons for delisting of virtual assets were in the order of project risk (50 percent), investor protection risk (22 percent) and market risk (22 percent). The amount of transactions between domestic VASPs that were subject to the travel rule amounted to KRW7.5 trillion, about 25 percent of all VASPs external transfer volume (KRW30.6 trillion) in H2 2022. The
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Mar 16, 2023

Prudential Regulations on Banks to be Revamped for Improving Loss Absorbing Capacity

The FSC and the FSS discussed the plans for bolstering capital adequacy and loan loss reserve requirements in the banking sector to improve banks loss absorbing capacity, as part of the agenda at the 3rd working group meeting of the taskforce on improving the management and operating practices of banks and banking system held on March 15. Background The banking sector, whose soundness remained in good shape even in the pandemic situation, has faced with growing uncertainties since interest rates sharply increased and the won-dollar exchange rates surged in 2022. (Capital Adequacy) As of the end of September 2022, the CET1 (common equity tier 1) capital ratio stood at 12.26 percent, which is well above a minimum CET1 capital ratio requirement (7.0 to 8.0 percent), but is lowered than 12.99 percent at the end of 2021 due to the impact of losses on bond portfolio, etc. When compared to major economies,the capital adequacy remains relatively low, and banks recent moves to expand dividends are likely to lead to a further decline in their capital ratios in the future. (Asset Soundness) The delinquency rate on bank loans, which had fallen during the pandemic, is gradually edging upprimarily led by the household sector, due to recent increases in loan interest rates, etc. In order to ensure sufficient loss absorbing capacity of the banking sector in preparation for future uncertainties, authorities plan to improve prudential regulations on banks (capital adequacy and loan loss reserve requirements) for preemptive risk management. Measures to Revamp Prudential Regulations in Banking Sector I. Improvement of Capital Adequacy Requirement a) Imposition of Countercyclical Capital Buffer (CCyB) (As Is) CCyB was introduced in 2016 as part of the Basel III capital regulations but the level of CCyB remains zero percent until now. As the amount of credit rapidly increased from the second half of 2019, there were signals in which banks were supposed to accumulate CCyB. However, due to
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Mar 16, 2023

3rd Working Group Meeting Held on Improving Management, Operating Practices of Banks and Banking System

The FSC and the FSS held the 3rd working group meetingof the taskforce on improving the management and operating practices of banks and banking system on March 15, chaired by FSC Vice Chairman Kim So-young. Details of 3rd Working Group Meeting Discussions First, participants discussed policy direction for prudential regulations on banks to improve their loss absorbing capacity. Financial authorities introduced their plans to ensure that banks have sufficient loss absorbing capacity in preparation for future uncertainties by bolstering prudential regulations. In this regard, authorities will consider imposing countercyclical capital buffer (CCyB) to enhance banks overall capital adequacy ratio and introducing stress capital buffer depending on each banks risk management status and stress test result. In addition, authorities are currently working on revising the regulations on supervision of banking business, which will authorize financial authorities to request banks to set aside special reserves for loan loss and conduct a regular inspection every year on banks models for forecasting estimated loss and demand improvements if the results are deemed insufficient. Regarding these measures for enhancing banks loss absorbing capacity, participants said that it is necessary to consider appropriateness not only in the amount of capital buffers but also in the timing and the pace of implementation. First, participants said that improving the effectiveness of CCyB accords with the recent developments in capital requirements and research direction. If prudential regulation is tightened in the banking sector, however, it may cause a balloon effect in which potential risks move to the non-banking sector. In this regard, participants emphasized the need for a balanced approach, which considers the soundness of the nonbank sector as well. They also stated that it is necessary to keep close tabs on the real estate market, given similarities between the credit cycle and the real e
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Mar 09, 2023

2nd Working Group Meeting Held on Improving Management, Operating Practices of Banks and Banking System

The FSC and the FSS held the 2nd working group meetingof the taskforce on improving the management and operating practices of banks and banking system on March 8, chaired by FSC Vice Chairman Kim So-young. Details of 2nd Working Group Meeting Discussions First, participants got briefed on and discussed the current progress in the development of a single-stop online loan transfer infrastructure and authorities plan for its expanded application. Authorities reviewed the progress of construction of a credit loan transfer system which authorities aim to launch in May 2023. To facilitate competition in the financial industry, authorities will broaden the scope of participating institutions (financial institutions, loan comparison platforms, etc.), make its fees calculation system more reasonable, and expand its service availability to include not only credit loans but also home mortgage loans. In this regard, participants said that a reasonable fees calculation for using the interest rate comparison platform is needed, and that it is essential to watch out another oligopoly created by platform business operators. Second, participants held in-depth discussions on ways to promote competition between the banking and nonbanking sectors as an extension of the discussion held in the recent meeting.Firstly, the financial investment, insurance and specialized credit finance business sectors each made a presentation on more concrete description of competition that can be realized when payment settlement services are allowed for its sector, following improvements in consumer convenience and ways to solve the previously identified risks. Regarding these, participants said that it is necessary to look at the payment settlement infrastructure from the perspective of for the same function, same risk and same regulations apply. If nonbanks are allowed to provide payment settlement services, various positive benefits to the public are expected such as convenient use of diverse types of
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Mar 09, 2023

Household Loans, February 2023

In February 2023, the outstanding balance of household loansacross all financial sectors declined KRW5.4 trillion compared to last month (m-o-m). The year-on-year change rate also dropped at a greater level (down 1.3 percent) compared to last month (down 1.3 percent), which showed a continuing trend of decline. Financial authorities will closely monitor household debt situation to keep it at a stable level, while continuing to inspect whether there exist any risks to household debt caused by high interest rates. (Overall) Household loans across all financial sectors dropped KRW5.4 trillion in February 2023. The year-on-year change rate (down 1.3 percent) declined at a faster pace compared to the previous month (down 1.0 percent in January), showing a continuing trend of decline since the second half of last year. (By Type) Mortgage loans (m-o-m) dropped for two consecutive months, and other types of loans also continued to decline. - (Mortgage Loans) Mortgage loans fell KRW0.6 trillion as both the banking sector and the nonbanking sector saw a drop of KRW0.3 trillion each. - (Other Types of Loans) Other types of loans fell KRW4.8 trillion, led by credit loans (down KRW2.5 trillion), but the pace of decline was slower compared to the previous month (down KRW7.1 trillion in January). (By Sector) Household loans edged down in both the banking and nonbanking sectors. - (Banking Sector) Household loans in the banking sector declined KRW2.7 trillion in February. Regarding mortgage loans, banks saw a growth in policy mortgage loans (up KRW1.0 trillion) and general individual mortgage loans (up KRW0.7 trillion), but a drop in jeonse loans (down KRW2.5 trillion),which resulted in a decline of banks mortgage loans for the first time since relevant statistics began to be collected in 2015. Other types of loans from banks dropped KRW2.4 trillion, led by credit loans (down KRW1.9 trillion), but the pace of decline slowed compared to the previous month. - (Nonbanking Sector) Nonb
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Mar 08, 2023

SFC Imposes Penalty Surcharge on Violation of Short Selling Regulation for First Time

The Securities and Futures Commission (SFC), a sub-commission of the FSC responsible for the oversight of the securities and futures market, reached a decision on March 8 to impose penalty surcharges of KRW3.87 billion and KRW2.18 billion on company A and company B, respectively, for their naked short selling activities, which violate the regulations on short sales prescribed in Article 180(1) of the Financial Investment Services and Capital Markets Act (FSCMA). Previously, illegal short selling activities were handled with administrative fine or caution. This is the first instance where authorities are imposing penalty surcharge on entities who committed those activities. While closely cooperating with relevant institutions, authorities will continue to maintain effective market monitoring, detection and investigation system on violation of regulations against short sales, and continue to strictly penalize illegal activities. Summary of Violation and Details of Discussion a) Company A had recorded on its internal system some amount of ◇◇◇ stocks that are expected to be issued through a capital increase without consideration before they are actually issued, in order to assess the value of its funds. Then, perceiving the stock as those can be sold, the company submitted sell orders on 210,744 ordinary shares (KRW25.14 billion) of ◇◇◇, which the fund had no ownership of, within a certain period in 2021. This was in violation of the regulation that prohibits naked short selling. b) Company B had erroneously entered the information of the borrowed △△▽ stocks, the name of which is similar to that of △△△ stocks, into its balance management system. Then, based on this overstated balance, the company submitted sell orders on 27,374 ordinary shares (KRW7.329 billion) of △△▽ stocks (which the company actually had no ownership of) on a certain day in 2021. This was in violation of the regulation that prohibits naked short selling. As this is the f
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Mar 06, 2023

FSC Holds Meeting to Review Corporate Bond and Money Market Situation and Real Estate PF Risks

The FSC held a meeting with relevant authorities to review the corporate bond and short-term money market situation and risks in the real estate project finance (PF) market on March 6.At the meeting, authorities discussed (a) the current corporate bond and money market trends, (b) direction for addressing risks in the real estate PF market, (c) direction to revise the inter-creditor agreement in real estate PF, and (d) measures to support private sector-led real estate PF restructuring. Inspection Results on Corporate Bond and Money Market At todays meeting, participants assessed that the corporate bond and money markets are showing clear signs of recovering from the contraction seen in the second half of last year. Corporate bond spreads have narrowed since the end of November last year,and demands for issuing corporate bonds are being smoothly absorbed in the market as the volume of non-financial corporate bonds issued in last January and February surpassed the amount of bonds reaching maturity.In the money market, interest rates on commercial papers (CPs) have continued to declinedue to the turnaround in liquidity conditions, and those on PF-ABCPs (project finance asset backed commercial papers) also appear to be on decline, compared to the end of last year. However, it is necessary to watch over market situations with vigilance because interest rates on PF-ABCPs with rating of A2 or lower still remain high, and as the issuance of corporate debts with shorter term maturities is taking place more frequently. Meanwhile, there still remain high uncertainties around financial markets this year, as it is forecast that the U.S. will continue to maintain its current tightening stance for longer with the help of its strong economic indicators and the higher-than-expected price indices and the war between Russian and Ukraine and the friction between the U.S and China continue. Therefore, participants agreed to continuously monitor the volatility of corporate bond and mone
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Mar 03, 2023

Interest Rate Disclosure to be Expanded in Banking Sector to Promote Competition

Financial authorities announced a plan to expand banks disclosure of the differences between interest rates on deposits and loans at the 1st working group meeting of the taskforce on improving the management and operating practices of banks and banking system held on March 2. The following are specific measures of the plan. a) Along with the current comparative disclosure on the differences between interest rates on newly transacted deposits and loans across different banks, the banking sector will additionally provide comparative public disclosure on the differences between interest rates on outstanding balance of deposits and loans among different banks, which will show the profitability level of each bank. In addition, the banking sector will also provide information on detailed interest rate of loans (household loans, business loans, etc.) and deposits based on outstanding balances. b) Interest rates on jeonse loans, which are highly relevant to peoples daily life, offered by individual banks will be comparatively disclosed in order to facilitate clear comparison of interest rates on jeonse loans (interest rates on home mortgages and credit loans are currently being disclosed). c) The banking sector will comparatively disclose individual banks interest rates on household loans in a more detailed manner, which subdivide them into base rate, spread, and preferential rate, intended to help customers compare respective characteristics of banks interest rates calculation. d) Each bank will voluntarily add a new webpage to put up explanations of the factors that bring about changes in their interest rates, such as expansion of loans to low- and mid- credit borrowers or increased ratio of short-term bank borrowings. Authorities plan to revise the detailed regulations on supervision of banking business and set up a computer network system between the Korea Federation of Banks and individual banks with a goal to begin implementation of these measures in July this year.
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Mar 03, 2023

1st Working Group Meeting Held on Improving Management, Operating Practices of Banks and Banking System

The FSC and the FSS held the first working group meetingof the taskforce on improving the management and operating practices of banks and banking system on March 2, chaired by FSC Vice Chairman Kim So-young. At the meeting, authorities shared the operating method of the working group and taskforce as well as discussed specific task items intended to promote competition in the banking sector and seek improvements in its industrial structure. Method of Operating the Taskforce and Working Group The taskforce and its working group will make public details of discussion on each task item after each meeting in order to enhance the understanding of general public. During discussions, authorities will consider not the interest relationship between different sectors but practical benefits to the general public, such as an improvement in consumer access to financial services, reduction in interest rate burdens, etc., as a core criterion, upon which specific improvement measures are prepared. In addition, in the process of taskforce and working group discussions, if there are certain task items that can be implemented early, authorities will immediately announce related improvement measures and promptly carry out follow-up actions. In this regard, participants were briefed and discussed on the measures to expand disclosure of the differences between interest rates on deposits and loans at todays working group meeting as a way to promote interest rate competition in the banking sector. They decided to implement the measures to require banks to disclose not only the differences between interest rates on newly transacted deposits and loans but also those between interest rates on outstanding deposit and loan balances. Especially, alongside promoting competition in the banking sector, authorities will promptly examine and review issues related to the banks interest rate calculation system and bonus remuneration practices. First, regarding banks interest rate calculation system, th
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Feb 28, 2023

Fast-Track System to be Utilized Effectively in Investigation of Unfair Trading Activities

The FSC, the FSS, the Korea Exchange and Seoul Southern District Prosecutors Office held a joint council meetingon February 27. At the meeting, authorities discussed and reviewed the outcome of operating the fast-track system in handling unfair trading activities in 2022. The fast-track system, introduced in 2013, is an emergency measure by Chair of the Securities and Futures Commission (SFC) in which a case deemed urgent and significant can be referred to the prosecutors office without going through the SFCs deliberation. If a case under investigation by the FSC or the FSS is deemed to have urgent need of the prosecutors investigation due to concerns about a suspect fleeing or a potential destruction of evidence, SFC Chair can decide to quickly refer the case to the prosecutors office after consulting with relevant authorities. In 2022, the FSC and the FSS referred a total of 20 casesto Seoul Southern District Prosecutors Office through the fast-track system, leading to prosecution of numerous offenders within short periods of time. In order to more effectively respond to unfair trading activities, which are becoming more sophisticated and organized, authorities will strengthen cooperation among related agencies and concentrate more investigative capacity on major cases that have a potential to inflict significant losses to investors. By utilizing the fast-track system, authorities will take swift and stern responses against major cases involving unfair trading activities, and make continuous efforts to improve the operation of the fast-track system. Major Fast-Tracked Cases in 2022 [Case #1] Case involving circulation of false information about COVID-19 test kit and sale of company stocks at high price for profiteering (Case Summary) The offenders (a) acquired a KOSDAQ-listed company (company A) through a leveraged buyout (LBO: MA without own capital), (b) then spread a rumorabout company As COVID-19 test kit to drastically push up its stock price,and (c) sold the
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Feb 10, 2023

FSC Proposes Regulatory Revisions to Facilitate Prompt Recovery of Demand in Housing Market

The FSC issued a notice of regulatory revisions in the five major financial sectors encompassing banks, insurance companies, savings banks, specialized credit finance business companies and mutual finance unions in order to implement the housing market-related measures introduced at the 3rd ministerial meeting on housing market held on November 10, 2022 and included in the FSCs annual work plan presented on January 30, 2023. The revised regulations are expected to take effect from March 2. Key Details 1) Permit lenders to issue new home mortgages to those who own multiple houses and intend to purchase a new house in regulated areas. The loan-to-value (LTV) ratio applicable to them will be increased up to 30 percent (currently zero percent) in regulated areas. In non-regulated areas, up to 60 percent of LTV ratio will be applied as before. 2) Permit lenders to issue new home mortgages to the entities who are registered as house rental business operators and house brokers. The LTV ratio applicable to them will be increased up to 30 percent in regulated areas and up to 60 percent in non-regulated areas (currently zero percent in both areas). 3) Abolish all restrictionsin issuing home mortgages to landlords who intend to use the mortgages to return lease deposits to their tenants. Lenders can issue mortgage loans to landlords within the borrower landlords LTV ratio and debt service ratio (DSR). 4) Abolish the current cap of KRW200 million a year placed on home mortgages intended to be used for emergency livelihood expenses (non-housing-related expenses) and allow lenders to issue home mortgages within the borrowers LTV ratio and DSR. 5) Temporarily apply (for one year) borrowers former DSR calculated at the time of original mortgage issuance when the borrower applies for a refinancing loan, to prevent a reduction in potential loan limit amid rate hikes and tightened DSR regulations. 6) Abolish the current limit on home mortgages (KRW600 million) placed on lower income h
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Feb 09, 2023

Household Loans, January 2023

In January 2023, the outstanding balance of household loansacross all financial sectors declined KRW8.0 trillion (m-o-m) and the growth rate also dropped at a faster pace (down 1.0 percent, y-o-y), showing a strong trend of decline. Financial authorities will ensure stable management of household debt and continue to seamlessly implement the normalization of relevant loan regulations to help non-speculative homebuyers. (Overall) Household loans across all financial sectors dropped KRW8.0 trillion in January 2023. The year-on-year growth rate (down 1.0 percent) declined at a faster pace compared to the previous month (down 0.5 percent), showing a continuous trend of slowing down. (By Type) Mortgage loans went down month-on-month for the first time since relevant statistics became available in 2015, and the rate of decline for other types of loans has also increased. - (Mortgage Loans) Mortgage loans fell KRW0.6 trillion in January, led by jeonse loans (down KRW1.8 trillion) and home-backed mortgage loans from nonbank sectors (down KRW0.6 trillion) such as mutual finance. - (Other Types of Loans) Other types of loans fell KRW7.4 trillion, as the rate of the decline increased compared to the previous month (down KRW5.2 trillion), led by credit loans. (By Sector) Household loans edged down in both the banking and nonbanking sectors. -(Banking Sector) Household loans in the banking sector declined KRW4.6 trillion in January. Regarding mortgage loans, banks saw a growth in government-sponsored mortgage lending (up KRW1.7 trillion) and group lending for new apartment subscription (up KRW0.3 trillion), but a drop in jeonse loans (down KRW1.8 trillion).Other types of loans from banks dropped KRW4.6 trillion, declining at a faster pace from a month ago (down KRW2.9 trillion) led by credit loans (down KRW3.8 trillion). -(Nonbanking Sector) In January, nonbanks saw a drop of KRW3.4 trillion in household loans with a slight rise in savings banks (up KRW0.1 trillion) but declines
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