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Jan 09, 2008
- Bank BIS Capital Ratios, September, 2007, and Implementation of Basel II in 2008
- BIS Capital Ratios, September, 2007Bank BIS capital ratios at end-September, 2007, averaged 12.71%, down modestly from 12.75% at end-2006. A 14.02% (KRW130.3 trillion) increase in risk-weighted assets led by loan growth of small- and medium-sized companies more than offset the 13.6% (KRW16.1 trillion) increase in bank capital and lowered the overall BIS ratio for the period.With bank net income totaling KRW13.2 trillion for the first nine months of the year, tier-1 capital rose 15.81% (KRW13.4 trillion) and tier-2 capital 8.01% (KRW2.7 trillion). Of the 13 commercial banks, the capital ratio rose for 8 banks but fell for 5 others during the January-September period.Basel II Implementation in 2008Implementation of Basel II is set to begin in 2008 as scheduled for domestic banks. Of the 18 domestic banks, Kookmin has received regulatory approval for the use of internal-ratings-based (IRB) approach; the 17 others are to begin with the standardized approach. Both the Industrial Bank of Korea and the Korea Development Bank are also working on regulatory approval for the use of IRB approach in 2009. As the implementation of Basel II progresses, the BIS capital ratios of domestic banks are expected to initially fall by one to two percentage points from the pre- Basel II ratios, a relatively minor drop given domestic banks’ robust accumulated net profits (estimated at KRW15.8 trillion for 2007) and the ample capacity to boost both tier-1 and tier-2 capital. Moreover, with a reduced risk weight (from 100% to 75%) for loans less than KRW1 billion to small- and medium-sized companies as well as other downward risk weight fine-tuning provided under the Basel II-based capital rules, domestic banks are not expected to see any material changes in their capital base. For the six regional commercial banks, the drop under Basel II is expected to be even smaller.With most domestic banks aiming for the adoption of advanced IRB currently set to be introduced in 2009, the implementatio
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Dec 24, 2007
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Nov 27, 2007
- FSC/FSS to Host IOSCO Asia-Pacific Regional Committee on November 28
- The Financial Supervisory Commission and the Financial Supervisory Service will host International Organization of Securities Commissions Asia-Pacific Regional Committee (IOSCO-APRC) and Roundtable Meetings on Wednesday, November 28, at the Lotte Hotel in Seoul.The IOSCO-APRC is one of four regional committees of IOSCO that focuses on regional issues in respect of securities regulation with 25 members representing securities regulators from 21 countries in the Asia-Pacific region. It is a high-level meeting of securities regulators in the region. It was held in Vietnam last year. At the Seoul meeting, about 50 senior securities regulators and representatives from OECD, ADB, and IOSCO are expected to take part.Following the APRC meeting led by Mr. Thirachai Phuvanatnaranubala, Chairman of IOSCO-APRC in the morning, three Roundtable Sessions will be held in the afternoon on (1) recent developments in securities supervision, (2) regulation of electronic trading systems, and (3) surveillance of private equity/hedge fund. The FSC/FSS will present its roadmap for the implementation of International Financial Reporting Standards (IFRS) and outline the Financial Investment Services and Capital Market Act (a.k.a. Capital Market Consolidation Act) set to take effect in February, 2009.* Please refer to the attached PDF for details.
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Nov 16, 2007
- Fund Assets Under Management: October, 2007
- Assets under management (AUM) of funds that invest at home and overseas totaled KRW330.8 trillion as of end-October, up sharply from KRW243 trillion at end-2006 and KRW218.2 trillion at end-2005. With surging stock markets at home and abroad, stock funds saw a KRW85.6 trillion increase in AUM since the beginning of the year.For funds that invest in overseas assets, AUM as of end-October came to KRW97.3 trillion, compared with KRW32.2 trillion at end-2006. The AUM of funds created in Korea accounted for KRW85 trillion of the total, compared with KRW19.3 trillion at end-2006. For offshore funds—those created outside Korea and sold to investors in Korea—the total was KRW12.3 trillion, down modestly from KRW13.5 trillion at end-May this year.Recent trends in fund investment1. The average investment-holding period in a fund jumped from 12.9 months in 2005 to 18.4 months as of end-September this year. The proportion of investor accounts with investment-holding period longer than 18 months came to 49.1% as of end-September and is likely to increase as more investors open installment plan accounts for stock investment. As of end-September, the number of stock installment plan accounts totaled 10.34 million with KRW34.5 trillion in AUM, compared with 6.43 million accounts with KRW21.9 trillion at end-2006 and 4.65 million accounts with KRW9.6 trillion at end-2005.2. The National Pension Service and many employer-sponsored retirement plans are increasingly turning to asset management companies for investment management, a development that bodes well for the future growth of the local asset management service industry. The NPS had KRW32.5 trillion under asset management companies as of end-September, up from KRW19.7 trillion at end-2006. For retirement plans, the figure jumped from KRW72.9 billion to KRW237.3 billion during the first nine months of 2007.3. Fund investment in China continued to pick up the pace in 2007 despite signs of overheated rush in Chinese markets. As
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Nov 06, 2007
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Oct 18, 2007
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Sep 19, 2007
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Sep 17, 2007
- Financial Holding Companies' Net Income: First Half, 2007
- The net income of the four domestic financial holding companies—Woori Financial Group, Shinhan Financial Group, Hana Financial Group, and Korea Investment Holdings—totaled KRW4.02 trillion on a consolidated basis for the first six months of 2007, an increase of KRW1.10 trillion or 37.8% from the same period a year earlier. Excluding the one-time gains (KRW1.17 trillion in pretax income) from the sale of shares in LG Card by the holding companies, net income for the period drops to KRW3.17 trillion.ROA rose modestly for Woori, Shinhan, and Hana but fell for Korea Investment. Excluding LG Card-related gains, ROA fell compared to the same period a year earlier.As of end-June, 2007, assets of the four financial holding companies totaled KRW589.8 trillion on a consolidated basis, up KRW74.5 trillion from the same period a year earlier. Most of the asset increase resulted from the takeover of LG Card by Shinhan (KRW9.8 trillion), growth of loans to small- and medium-sized companies (KRW46.2 trillion), and increases in securities assets.In terms of group assets, banking constituted the largest asset for Woori (89.6%), Shinhan (83.4%), and Hana (94.9%). For Korea Investment Holdings, securities businesses made up 91.3% of the group assets.* Please refer to the attached PDF for details.
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Sep 03, 2007
- Bank Net Income: First Half, 2007
- Bank net income for the first half of 2007 totaled KRW9.92 trillion, up KRW1.88 trillion from KRW8.04 trillion a year earlier. Bank income for the first half of the year was helped by after-tax gains totaling KRW3.1 trillion from the sale of domestic banks’ equity stakes in LG Card (KRW2.9 trillion) and SK Networks (KRW200 billion). Excluding these gains, net income for the period totaled KRW6.8 trillion, compared with KRW7.2 trillion a year earlier.Whereas interest income rose 4.1% from KRW14.6 trillion to KRW15.2 trillion, non-interest income nearly doubled from KRW4.1 trillion to KRW8.1 trillion in the first half of the year on increased revenues from service fees and securities gains. Service fee income—including income from money transfer services, ATM and bancassurance sales—totaled KRW2.24 trillion, up from KRW1.94 trillion a year earlier.ROA for the first half of the year averaged 1.52%, compared with 1.41% a year earlier, but excluding the one-time gains realized from the sale of shares from debt-to-equity swaps ROA drops to 1.05%, lower than 1.25% for H1, 2006.The so-called structural profitability—a measures of profitability defined as bank income which is generated from operational activities and is both sustainable and recurring (Framework for the Assessment of Bank Earnings, BIS, 2002)—came to 1.47%, down from 1.62% a year earlier. A drop in net interest margin was the key factor for the lower profitability.* Please refer to the attached PDF for details.
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Aug 31, 2007
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Aug 30, 2007
- Mr. William A. Ryback, Former Deputy Chief Executive of Hong Kong Monetary Authority, to Join the Financial Supervisory Service
- The Financial Supervisory Service announced on August 30 the appointment of Mr. William A. Ryback, the former Deputy Chief Executive of Hong Kong Monetary Authority (HKMA), as Special Advisor to the FSS to help improve financial market regulation and foster global standards. The FSS expects Mr. Ryback to play an active role as well in helping the FSS strengthen its supervisory networks and cooperation with foreign regulators and international regulatory organizations.Mr. Ryback has extensive experience and expertise in banking supervision and international financial affairs from his thirty five years of professional career at the U.S. Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency. He also served as the Chairman of the Association of Supervisors of Banks of the Americas and a member of the Core Principles Liaison Group of the Basel Committee on Banking Supervision, and has over the years established strong ties and network with financial supervisors worldwide and multilateral organizations. Prior to the FSS appointment, Mr. Ryback worked as the Deputy Chief Executive of HKMA where he oversaw banking supervision and contributed to financial sector growth policies.Among others, the FSS expects Mr. Ryback to reinvigorate the ongoing preparations for the New Basel Accord as well as the FSS drive for deregulation and advanced financial supervision. With his strong ties and network with financial supervisors and international supervisory organizations, Mr. Ryback is also expected to make significant contribution to Korea’s financial hub initiative.Mr. Ryback will assume his duties at the FSS on October 22, 2007. Initially, he will act as Advisor to the Governor in international supervisory affairs such as the New Basel Accord and risk management in the banking sector. He is also expected to carry out special tasks on ongoing supervisory matters under the Governor’s direction. The FSS also announced that it will decid
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Aug 24, 2007
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Aug 07, 2007
- Chairman/Governor Kim Yong-Duk Takes Office at Financial Supervisory Commission and Financial Supervisory Service
- The Financial Supervisory Commission and the Financial Supervisory Service announced that Mr. Kim Yong-Duk took office as the sixth Chairman and Governor of the Financial Supervisory Commission and the Financial Supervisory Service on August 6. Chairman/Governor Kim succeeds Mr. Yoon Jeung-Hyun, whose three-year term ended on August 3. Mr. Kim served as Economic Advisor to the President before assuming his new position.Chairman/Governor Kim began his career in public service at the Ministry of Finance and Economy (former Ministry of Finance) in May, 1977. After taking an overseas assignment as a Treasury Officer at the Asian Development Bank in 1982, Mr. Kim returned to the MOFE in 1989 and served at several key positions in international affairs and finance, including Secretary for Financial Affairs to the President, Director-General of International Finance Bureau, Deputy-Minister for International Affairs, and Commissioner of Korea Customs Service. In May, 2005, he was appointed Vice Minister of the Ministry of Construction and Transportation and served in that position until November, 2006, when he became Economic Advisor to the President.Chairman/Governor Kim graduated from Korea University with B.A. in Business Administration in February, 1974. He also received an MBA from Ateneo De Manila University during his tenure at the Asian Development Bank.* Please refer to the attached PDF for details.
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Jun 22, 2007
- FSC/FSS to Host Second Asian Forum of Insurance Regulators in Seoul
- The Financial Supervisory Commission and the Financial Supervisory Service will host the Second Asian Forum of Insurance Regulators (AFIR) in Seoul on June 27, 2007. AFIR is a gathering of insurance regulators from across Asia to promote regional dialogue and cooperation on insurance supervision and facilitate sound development of insurance markets throughout Asia. The first AFIR meeting was held in Beijing in October 2006, following a proposal by China Insurance Regulatory Commission in May 2005 to create a new forum to strengthen relations and cooperation among Asia’s regulators.Approximately thirty senior insurance supervisors from fourteen insurance supervisory authorities and the International Association of Insurance Supervisors (IAIS) are expected to participate in the Seoul meeting. The participating supervisors are China Insurance Regulatory Commission, Financial Supervisory Commission of Taiwan, Office of the Commissioner of Insurance of Hong Kong, Insurance Regulatory and Development Authority of India, Financial Supervisory Agency of Japan, Insurance Commission of Jordan, FSC/FSS of Korea, Monetary Authority of Macao, Bank Negara Malaysia, Insurance Board of Nepal, Saudi Arabian Monetary Agency, Monetary Authority of Singapore, Insurance Department of Ministry of Commerce of Thailand, and Ministry of Finance of Vietnam.Four separate sessions are planned throughout the day for discussions on risk-based supervision, insurance fraud, natural and man-made catastrophic disasters, and regional cooperation. The FSC/FSS plans to make presentations on Risk Assessment and Application System (RAAS)—a new tool implemented in April this year to better assess insurance companies’ risk profiles—and ongoing preparations for the adoption of risk-based capital. A proposal for the creation of a working group to improve solvency regime for insurance companies is also planned.* Please refer to the attached PDF for details.
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Jun 14, 2007
- Bank BIS Capital Ratios, March, 2007, and Implementation of Basel II Capital Accord
- Bank BIS Capital RatiosBank BIS capital ratios as of the end of March, 2007, came to 12.99%, up from 12.75% at end-2006. With bank net income totaling KRW6.6 trillion for the first three months of 2007, bank capital increased 5.0% or KRW5.9 trillion while risk-weighted assets grew 3.0%. Tier-1 capital rose 7.4% or KRW6.3 trillion, but tier-2 capital experienced a modest drop of 1.0% or KRW300 billion. The capital ratio jumped for 12 banks but fell for six others during the January-March period.Timetable for Basel II Capital AccordThe FSC/FSS is expected to finalize by the end of June new capital standards that will take effect beginning in January, 2008, under the Basel II capital accord (January, 2009, for advanced IRB approach). The FSC/FSS is also expected to commence the approval process for banks opting for IRB approach later this year.* Please refer to the attached PDF for details.
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May 25, 2007
- Chairman/Governor Yoon Jeung-Hyun to Hold Roundtable Meeting in London and Deliver Keynote Speech at IIF Spring Membership Meeting in Athens
- Chairman/Governor Yoon Jeung-Hyun of Financial Supervisory Commission and Financial Supervisory Service is scheduled to travel to Basel, London, and Athens from May 24 to June 3 to meet with high-level regulators, hold a roundtable meeting with senior executives of global financial firms, and deliver the keynote speech at the Spring Membership Meeting of the Institute of International Finance (IIF).In Basel, Chairman/Governor Yoon is expected to meet with Dr. Yoshihiro Kawai, Secretary General of the International Association of Insurance Supervisors (IAIS), for discussions on issues ranging from Asia’s insurance market development to progress with IAIS Multilateral Memorandum of Understanding initiative. Chairman/Governor Yoon also plans to hold a high-level meeting with BIS General Manager Malcolm Knight and Secretary General Stefan Walters of the Basel Committee for discussions on, among others, progress with Basel II and issues related to cross-border implementation of the new accord.During his stay in London, Chairman/Governor Yoon is expected to sign a Memorandum of Understanding on supervisory cooperation with Chairman Callum McCarthy of U.K. Financial Services Authority and meet with Dr. Chris Gibson-Smith, Chairman of London Stock Exchange, for discussions on global equity markets, exchange consolidation, and London’s success as a global financial center. A roundtable meeting with senior executives of international financial services firms that are active in Korea and throughout Asia is also scheduled in London. Chairman/Governor Yoon plans to stress the success Korea has had with deregulation, reinforcing market discipline, and improving the overall regulatory environment for foreign businesses and investors.In Athens, Greece, Chairman/Governor Yoon will deliver the keynote speech at the IIF Spring Membership Meeting before senior business executives of global financial firms. In his speech, Chairman/Governor Yoon is expected to emphasize the benefits
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May 17, 2007
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May 11, 2007
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Apr 05, 2007
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Mar 21, 2007
- Signing of Statement of Protocol with U.S. PCAOB
- The Financial Supervisory Commission and the Financial Supervisory Service announced the signing of Statement of Protocol (“Statement”) with the U.S. Public Company Accounting Oversight Board (PCAOB) on March 21. The Statement, signed by Mr. Yoon Jeung-Hyun, Chairman of the FSC and Governor of the FSS, and Mr. Mark Olsen, Chairman of the PCAOB, in Seoul, is intended to facilitate cooperation in matters related to the oversight of the auditors of both countries and thereby contribute to improved accuracy and reliability of audit reports.The Statement consists of four key provisions on cooperation relating to inspection, investigation, sanction, and confidentiality. In respect of cooperation in an inspection, the Statement provides that each regulatory authority may, on behalf of or in support of the other, review audit papers, conduct interviews of an audit firm’s personnel, and assess an audit firm’s quality control system. In determining sanctions for accounting firms that fall within the regulatory jurisdiction of both the FSC/FSS and the PCAOB, the Statement provides that each regulatory authority shall endeavor to take into account the laws and regulations of the other. In respect of confidentiality, the Statement calls on both the FSC/FSS and the PCAOB to hold confidential documents and information created or received in the course of cooperation.For the FSC/FSS, the signing of the Statement is the first ever with a foreign audit oversight authority, and the expectation is that the Statement will contribute to enhanced cooperation on the oversight of accounting firms between the two countries. With regulators elsewhere stepping up oversight of auditors of multinational companies whose securities are traded in their markets, the FSC/FSS will endeavor to enter into similar cooperative arrangements with other foreign regulatory authorities in order to avoid duplicate audit supervision and reduce compliance cost.* Please refer to the attached PDF for detail
