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Oct 19, 2020
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Oct 19, 2020
- FSC Holds Kick-off Meeting to Root Out Unlawful Trading Activities in Stock Markets
- Vice Chairman Sohn Byungdoo held a kick-off meeting of the task force on the prevention of unlawful and unfair trading activities in stock markets on October 19. The task force will operate until the end of March 2021 and regularly report its implementation status on a monthly basis.The following is a summary of Vice Chairman Sohn’s remarks.BACKGROUNDDue to the rapid spread of COVID-19 around the world, domestic stock markets plunged at the beginning of the year. However, stock prices quickly recovered to the pre-pandemic level backed by the strong fundamentals of the Korean economy, prompt implementation of the emergency financial support programs and the effective K-quarantine measures. Moreover, an upsurge in the trading volume by retail investors also contributed to the quick market recovery. The retail investors’ growing interest in stock investment is a positive sign. However, without a fair market order, investors’ trust in the market may crumble and the recent investment boom may end up as a short-lived one, preventing a further advancement of stock markets.With abundant market liquidities flowing into stock markets, it has become all the more necessary to pay attention to the growing concerns about illegal and/or unfair trading activities in the stock markets.POTENTIAL ISSUESThe recent trends in stock market activities reveal the following three potential problems. First, due to the rising market volatility, there are growing risks of unfair trading activities surrounding particular groups of stock items, such as COVID-19 and “untact” sectors. In addition, as the period of short-selling ban was extended until March 15, 2021, it has become necessary to closely monitor illegal short sale activities during this period, including naked short-selling. Second, unfair trading activities including price manipulation are being carried out in a more organized and complex manner. However, the current system from the detection to punishment stage takes a long
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Oct 15, 2020
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Oct 14, 2020
- Government Reviews Financial Policy Agenda for Post-pandemic Era
- Vice Chairman Sohn Byungdoo held the 25th financial risk assessment meeting via teleconference on October 14 and reviewed financial policy tasks for the post-pandemic era. The policy agenda focuses on four key areas—(a) supporting innovation-driven growth, (b) promoting digital finance, (c) expanding support for inclusive finance and (d) ensuring stability in the financial system.The following is a summary of Vice Chairman Sohn’s remarks.(NEED TO PREPARE FOR POST-PANDEMIC ERA) In response to the pandemic-induced economic shocks, the government has provided emergency financial support for small merchants and businesses. However, the disruption caused by COVID-19 may be just beginning. With global supply chains being reshuffled, contactless, medical, bio and green industries are becoming more prominent. This type of restructuring is also inevitable in the financial industry. There are also growing concerns about a deepening wealth gap between the haves and the have-nots. Potential risks in financial sectors, such as growing appetite for riskier and higher yield products as well as rising debt, have been accumulating. These are all the reasons that financial policies should account for the preparation of the post-COVID-19 era.(FINANCIAL POLICY AGENDA FOR POST-PANDEMIC ERA) The policy agenda announced on July 24 includes (a) supporting innovation-driven growth, (b) promoting digital finance, (c) expanding support for inclusive finance and (d) ensuring stability in the financial system. First, with regard to the first policy agenda, the government has been providing targeted financial support to innovative and promising businesses. Under the government-wide initiative to develop a thousand innovative firms, a total of thirty-two businesses have been selected with KRW211.1 billion in lending support being provided to sixteen of them. In November, more than 168 additional firms in the future car, biochemical and high-tech medical device industries are expected to be se
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Oct 14, 2020
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Oct 13, 2020
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Oct 07, 2020
- Vice Chairman Discusses Importance of Steady Financial Support for SMEs and Small Merchants
- Vice Chairman Sohn Byungdoo held the 24th financial risk assessment meeting via teleconference on October 7 and discussed the implementation status of COVID-19 financial support programs and other market conditions.The following is a summary of Vice Chairman Sohn’s remarks.(COVID-19 FINANCIAL SUPPORT) The latest COVID-19 emergency support programs announced in September have been operating smoothly. The second round of emergency loan program for small merchants began to provide support on September 23, with its recently increased lending cap and broadened recipient base. Since the improvements became effective, some KRW350 billion worth of loans were issued within a week with interest rates also falling compared to earlier periods. More numbers of small merchants chose to apply via contactless channels, which helped avoid long lines at lending institutions and prevent the spread of the virus.The hardship experienced by SMEs amid a persistent pandemic underscores the importance of having a strong and tightly-woven financial support system to help address their liquidity shortages. In this regard, the government has improved existing programs according the needs of the SMEs and middle market enterprises, thus responding to changing market conditions in a more flexible way. In terms of the COVID-19 P-CBO support, the government has decided to increase lending caps for companies and lower underwriting ratios for subordinated debt. These changes will begin to be applied with P-CBO issuances in October. In addition, the government has significantly improved the lending support program specifically targeted at the pandemic-hit SMEs and middle market enterprises on September 24, doubling lending caps, offering better interest rates and extending the support period.(HOUSEHOLD LOANS) In September, the growth of household loans from five major banks declined compared to the previous month. In particular, credit loans fell by about a half due to effective management by banks.
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Oct 06, 2020
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Oct 05, 2020
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Oct 05, 2020
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Sep 24, 2020
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Sep 24, 2020
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Sep 24, 2020
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Sep 23, 2020
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Sep 23, 2020
- Vice Chairman Pledges to Stay Alert for Potential Risks in Financial Markets
- Vice Chairman Sohn Byungdoo held the 22nd financial risk assessment meeting via teleconference on September 23 and discussed market conditions and issues concerning household loans, soundness of financial institutions and corporate credit situation with relevant authorities.The following is a summary of Vice Chairman Sohn’s remarks.(FINANCIAL MARKET CONDITIONS) The corporate bond and short-term money markets showing signs of liquidity crunch at the end of March have largely improved due to prompt market stabilization measures taken by the government. Market experts forecast that the current stability will continue throughout the end of September given sufficient liquidity in the market. However, as there are potential risks related to COVID-19, relevant authorities should continue to closely monitor markets. The financial authorities will work to prevent an end-of-quarter credit crunch through various market stabilization measures already put in place.With regard to stock market conditions, there are possibilities of rising volatility given uncertainties surrounding the US presidential election, US-China relations, etc. There are also concerns about a growing number of retail investors taking out loans to invest in stocks including in overseas stock markets where there may not be adequate information available to them. As such, retail investors should be well aware of the risks involved in overseas stock investment, and financial institutions should make sure that investor protection measures are closely being observed in this regard.(HOUSEHOLD LOANS) The recent spike in household loans was caused in part by rising demand for loans by those undergoing difficult situations. However, a recent trend reveals that high income earners with high credit scores are increasingly turning to credit-based loans. As such, lending institutions should closely review borrowers’ debt service capabilities and monitor concentration of excessive liquidity in property markets, etc.(S
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Sep 18, 2020
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Sep 17, 2020
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Sep 16, 2020
- Financial Groups to Provide Integrated Disclosures
- The FSC announced the availability of integrated disclosures by financial groups on September 16. Pursuant to the best practice guidelines on the supervision of financial conglomerates, financial groups will begin to disclose information on 25 specific criteria including their management status, governance structure and capital adequacy requirements through a group-wide integrated disclosure format starting from the end of September this year.KEY DETAILS(DISCLOSURE INFORMATION) Financial groups are required to disclose information on 8 specific areas and 25 sub-categories as follows—(a) general management status, (b) corporate governance structure, (c) internal control, (d) risk management, (e) capital adequacy requirements, (f) internal transaction, (g) capital or credit extension to major shareholders and (h) other relevant information.(PERIOD) Quarterly disclosures are due within three months prior to the end of every quarter and annual disclosures are due within five months and fifteen days from the end of every fourth quarter.(HOW TO ACCESS) A major representative company of the financial conglomerate will put up group-wide integrated disclosure information on its website after gathering and confirming disclosure information from the group’s subsidiaries.EXPECTATIONWith the availability of information on group-wide risk factors and risk management status in an easily understandable format, the newly introduced integrated disclosures by financial groups will provide useful information to consumers and investors while boosting risk management capabilities of financial companies through market-based approaches. Meanwhile, the government will continue to work for the enactment of the legislation on the supervision of financial conglomerates.* Please refer to the attached PDF for details.
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Sep 15, 2020
- Government Announces Improvements to Emergency Loan Program for Small Merchants
- Vice Chairman Sohn Byungdoo presided over the 21st financial risk assessment meeting via teleconference on September 15, and discussed COVID-19 emergency support measures and follow-up plans for the Korean New Deal fund.The following is a summary of Vice Chairman Sohn’s remarks.(EMERGENCY SUPPORT) The government announced last Thursday its plans to make available a new round of emergency support for small merchants and SMEs to help them with the impact of the COVID-19 resurgence. The first round emergency loan program for small merchants provided support to about 540,000 businesses. With regard to the second round emergency loan program for small merchants, the government will double the individual loan cap from KRW10 million to KRW20 million and allow first round support recipients to be eligible for second round emergency loans as well. Accordingly, the first round support recipients within KRW30 million may apply for second round emergency loans starting from September 23. For SMEs, the government will make available KRW2.5 trillion in additional lending support through preferential credit loans and expand P-CBO issuance available for each business entity and sector.Local banks and the Korea Credit Guarantee Fund should take measures to ensure that their IT systems are ready for processing changes in the second round emergency loan program for small merchants, which will take effect from September 23. With approximately 500,000 small merchants expected to be eligible for this program, lending institutions should also focus on virus prevention measures.(K-NEW DEAL FUND) The government will work on follow-up measures for the launching of the Korean New Deal fund. To this end, a working group will be set up this week led by the Korea Development Bank and Korea Growth Investment Corporation to come up with operational guidelines and specific plans. Within September, the government will establish a guideline for K-New Deal investment, which will specifically designa
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Sep 10, 2020
- FSC Holds 1st Consultative Body Meeting on Digital Finance
- The FSC launched a public-private joint consultative body on digital finance, composed of leaders and experts representing financial sectors, big techs, fintechs and major financial labor unions, and held a kick-off meeting on digital finance via teleconference on September 10.The joint consultative body has been set up to tackle diverse challenges arising from the era of digital finance and offer balanced perspectives and solutions. The consultative body will operate four thematic working groups on (i) big tech-fintech relations, (ii) rules and regulations, (iii) financial data security and (iv) financial consumer protection.During the meeting, Vice Chairman Sohn Byungdoo spoke about the need to (i) continue regulatory reforms to promote innovation in financial services, (ii) build a fair competition environment for market participants, (iii) ensure consumer safety in digital finance, (iv) review risk factors related to financial market stability and (v) evaluate the impact of digital transformation on the society as a whole.The participants agreed on the need to have ongoing discussions on how to further develop the traditional financial industry and to promote close cooperation and win-win strategy between financial enterprises and digital platform businesses including fintechs.The joint consultative body will hold meetings regularly throughout this year and make its findings available to the public.* Please refer to the attached PDF for details.
