Press Releases - Financial Services Commission

Press Releases

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Jun 29, 2020

Early Implementation of Basel III Credit Risk Framework

The financial authorities announced that fifteen banks and eight bank holding companies will begin to gradually implement Basel III credit risk framework from the end of June 2020. IMPLEMENTATION SCHEDULEDomestic banks and bank holding companies were asked to notify the authorities by the end of May their preferred date to begin the implementation. A total of fifteen banks and eight bank holding companies applied for the early implementation as shown below and the financial authorities approved their implementation schedule.Standard Chartered Korea, Kakao Bank and K Bank will begin to implement Basel III credit risk framework beginning in January 2023.EXPECTATIONThe early implementation of Basel III credit risk framework is expected to boost the capital adequacy ratio of domestic banks and bank holding companies. The government expects that the increased capital adequacy ratio at banks will help make available more funding sources to finance and support the real economy.* Please refer to the attached PDF for details.
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Jun 25, 2020

Personal Debt Purchase Program to Begin June 29

Vice Chairman Sohn Byungdoo attended the launching of the Korea Asset Management Corporation’s personal debt purchase program on June 25 and spoke about the importance of inclusive finance.KAMCO, lending institutions and other relevant institutions signed a memorandum of agreement. Under the agreement, lending institutions may sell non-collateralized delinquent personal debt to KAMCO, which in turn will take over individual debt and help debtors with debt adjustment plans.KAMCO’s personal debt purchase program begins on June 29 for the initial duration of one year with the possibility of extending thereafter.The following is a summary of Vice Chairman Sohn’s remarks.With the government’s KRW175 trillion-plus financial support programs have helped to ease problems of market instability and liquidity shortage. However, widening income gap in the society needs to be closely watched. Job losses and business closures have created extra burdens for many individuals, while asset prices are also showing signs of instability in the property and stock markets. The delinquency rate in household debt has not increased, but the rising trend in household debt needs to be watched carefully.The agreement signed by KAMCO and financial institutions today is aimed at providing assistance to the most vulnerable debtors. The government introduced on April 29 a deferment of loan repayment program for individual debtors who are incapable of servicing debt due to the pandemic-related reasons. For delinquent debtors, KAMCO will take over individual debt from lending institutions and help with debt adjustment. To help establish a more appropriate relationship between lending institutions and debtors, the government will work on introducing a bill aimed at protecting debtors’ rights and preventing excessive debt collection methods.* Please refer to the attached PDF for details.
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Jun 24, 2020

Government Unveils Plans to Root Out Vishing

The government unveiled its plans to root out vishing (or voice phishing) scams through close coordination between the financial, communications and investigative authorities on June 24.BACKGROUNDThe government has been pursuing policies to promote inclusive finance and human security along with innovation-led growth. The advancement in digital technologies has led to a rise in vishing scams using new and more sophisticated tricks and technologies. With the widespread usage of smartphones, illegitimate use of burner phones and apps has been on the rise as well. Vishing is a crime that brings ruin to families and undermines trust in our financial and telecommunications systems. With more sophisticated tricks and tools, it requires strong, comprehensive and persistent responses from the government.KEY MEASURESThe government-wide collaboration in finance, communication and investigation will help strengthen vishing prevention measures from prevention to detection to punishment and in terms of assisting victims and raising public awareness.I. DEVELOP COMPREHENSIVE PREVENTION SYSTEM- Prevent the use of mobile phones in vishing scams- Require financial companies to adopt Fraud Detection System (FDS) to closely monitor suspicious transactions linked to vishing, and have them utilize big data and AI to share information with relevant public institutions- Strengthen duties and responsibilities of financial companies and telecommunications service providers in preventing vishing scams- Prepare plans to improve the personal authentication and ID verification system in the third quarter- Implement pilot projects and RD to develop new digital technologies to be applied in vishing preventionII. BOLSTER CRACKDOWN PENALTY- Strengthen crackdowns on financial scams including vishing: (a) set up close cooperation network with overseas investigative authorities while increasing crackdowns on smishing and other newly emerging types of fraud- Make statutory punishment on vishing more sev
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Jun 24, 2020

FSC Changes Rules on Liquid Asset Requirements for Repo Transactions

The FSC revised the regulations on financial investment business on June 24, laying out specific liquid asset requirements for the sellers of repurchase agreements.The FSC has been pursuing changes in regulations to improve the effectiveness and soundness of the repurchase agreement (repo) market. The revisions to the Enforcement Decree of the Financial Investment Services and Capital Markets Act in December last year introduced a legal basis to require repo sellers (borrowers) to hold liquid assets. The changes in regulations adopted today are a follow-up measure, establishing the specific scope of liquid assets as well as holding requirements.SCOPE OF LIQUID ASSETSLiquid assets include cash, savings accounts, certificates of deposit, liquid loan commitments, readily disposable deposits of securities companies, up to 30 percent of money market trust (MMT) and money market wrap (MMW), promissory notes, payment reserves of the Bank of Korea. Liquid assets in foreign currencies also qualify.LIQUID ASSET HOLDING REQUIREMENTSThe requirements for liquid asset holding for repo sellers (borrowers) will gradually increase in three stages as shown in the table below from up to one percent of the transaction amount in July to up to ten percent between August 2020 and April 2021, and then to up to twenty percent thereafter.The above changes in regulations will go into effect on July 1, 2020 along with the improved rules on minimum margin requirements for repo buyers (lenders).* Please refer to the attached PDF for details.
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Jun 24, 2020

FSC Identifies D-SIBs for 2021

The FSC identified a total of ten bank holding companies and banks as domestic systemically important banks (D-SIBs) for 2021 as follows: Shinhan Financial Group, Hana Financial Group, KB Financial Group, Woori Financial Group, NH Financial Group, Shinhan Bank, Woori Bank, KEB Hana Bank, KB Kookmin Bank and NH Bank. Compared to the previous year, Jeju Bank from Shinhan Financial Group will be removed from the D-SIB list pursuant to the temporary easing of financial regulations announced on April 17, which excludes smaller sized regional banks from the D-SIB designation and relieves them from the duty of additional capital surcharge.Those identified as D-SIBs will be required to set aside an additional capital surcharge of 1% in 2021.* Please refer to the attached PDF for details.
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Jun 23, 2020

FSC Chairman Highlights Importance of Building Mutual Trust between Start-ups and Investors

FSC Chairman Eun Sung-soo attended the global start-up conference NextRise 2020 on June 23 in Seoul, and delivered congratulatory remarks. During his speech, Chairman Eun explained the government’s policy to promote innovation in financial services while encouraging start-up entrepreneurs.The following is a summary of Chairman Eun’s remarks.(START-UP ENVIRONMENT) Despite unexpected difficulties and uncertainties caused by the COVID-19, the changing economic conditions provide challenges as well as new opportunities. We may be able to seize new opportunities if we are well prepared for the post-pandemic world and changing global economic conditions.(INNOVATION IN FINANCIAL SERVICES) The government is pursuing diverse strategies to change our economy from a ‘chaser’ to a ‘leader.’ In finance, the government will focus on promoting innovative financial services to help support companies. Working with other ministries, the FSC will select about 200 innovative firms to provide targeted financial assistance. To support innovative firms at their growth stage, the government will work to expand the scale-up fund from KRW8 trillion to KRW15 trillion by 2022. To promote crowdfunding as an important financing channel for start-ups, the government will allow start-ups as well as SMEs to issue securities to raise funds and expand the annual issuance cap from KRW1.5 billion to KRW3 billion. The government-backed start-up incubating center Mapo Front1 will become operational next month. During the second half of this year, the government will work on improving the business credit evaluation system.(BUILDING MUTUAL TRUST) Aside from government policies, building mutual trust is important between businesses and investors. Innovative ideas and technological prowess should earn trust from investors. Similarly, investors and lending institutions should build trust from the market through transparent management of capital.* Please refer to the attached PDF for details.
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Jun 23, 2020

Government to Stamp Out Illegal Predatory Lending

The government discussed ways root out illegal predatory lending at a meeting on anti-corruption policy led by President Moon Jae-in on June 22. The FSC and other relevant ministries have drawn up a joint framework for combating loan sharking, specifically focusing on the following key policy areas. The government-wide task force will regularly monitor developments and work on improvements.(PREVENT ILLEGAL SALES ACTIVITIES) Set up a rapid alert system for both online and offline illegal predatory loan advertisements(ENHANCE CRACKDOWNS) Enhance monitoring and detection of sophisticated sales activities, including online and offline illegal advertisements, suspicious reports filed at the FSS and criminal investigation cases led by law enforcement agencies(ASSIST VICTIMS PREVENT RECURRENCE) Provide comprehensive and tailored supports to victims of loan sharking in the form of financial, legal, welfare and employment assistance to help them recover(RAISE PUBLIC AWARENESS) Provide information to the public about the widely used tactics and harmful effects of loan sharks, how to report illegal activities to authorities as well as the availability of government-backed microloan productsThe FSC will soon announce a revision bill to the Credit Business Act to bar profit making from illegal loan sharking activities and push for the enactment of more punitive penalties.* Please refer to the attached PDF for details.
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Jun 23, 2020

Vice Chairman Stresses Importance of Balanced Approach to Support Real Economy Sectors

Vice Chairman Sohn Byungdoo presided over the 9th financial risk assessment meeting on June 23 to assess the financial market conditions and check the implementation status of the COVID-19 financial support.The following is a summary of Vice Chairman Sohn’s remarks.(INTERIM ASSESSMENT ON COVID-19 FINANCIAL SUPPORT) The first- and second-stage financial support programs for small merchants and SMEs provided timely financial support to the businesses in need. Out of the KRW135 trillion-plus package, about KRW54.2 trillion has been provided so far. For SMEs and middle market enterprises facing temporary setbacks in liquidity, policy banks have made available about KRW29.1 trillion worth of special loans and guarantees. The government’s market stabilizing measures, such as the bond market and stock market stabilization funds and the corporate bond and CP purchase program have provided backstops to the financial markets. Meanwhile, businesses with unfavorable credit backgrounds are unable to fully take advantage of the financial support being provided. In this regard, the government has been focusing on and will continue to work on filling the gaps by introducing measures specifically intended to help businesses with low credit records.(WELL-BALANCED POLICY APPROACH) With high levels of uncertainties in the global economy, it is necessary to pursue a well-balanced approach between maintaining the soundness of financial institutions and supporting the real economy. Although banks have been able to maintain their financial soundness, they need to boost their loss absorbing capacity through close monitoring and accumulation of loan-loss provisions in preparation for a prolonged pandemic situation.For securities firms, the government will adjust regulations on their short-term borrowing from call money market in response to market developments. To ease their liquidity shortage, the government temporarily raised the average monthly limit on call market loans by securities
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Jun 22, 2020

Vice Chairman Holds Talks on Improving Rules on Accounting and Auditing

Vice Chairman Sohn Byungdoo held a meeting on improving rules on accounting and auditing on June 22. With some of the key changes going into effect this year, Vice Chairman Sohn emphasized that it is important to maintain close communication with market players while continuing to pursue reform initiatives.The FSC has prepared the following improvements in close consultation with the relevant industry officials.(APPOINTMENT OF SFC DESIGNATED AUDITOR) Remove redundancy in the list of companies that are required to appoint auditors designated by the Securities and Futures Commission by making changes to the current regulation (Sep. 2020)(STANDARD AUDIT TIME) Introduce a clearer standard on the appropriate time period required for audit and establish rules on voting procedures where a simple majority system will be applied with two-thirds of audit committee members required to be present (Dec. 2020)(AUDIT COMMITTEE) While adhering to the principle of independence in appointing an auditor, reduce the minimum quorum for audit committee from seven to five and allow non-board members of lending institutions to be included on the committee (Sep. 2020)(INTERNAL ACCOUNTING MANAGEMENT SYSTEM) Establish an internal audit roadmap to help remove market uncertainties (Dec. 2020)The FSC will also work on improvements to the auditor designation system to promote competition based on audit quality.* Please refer to the attached PDF for details.
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Jun 19, 2020

FSC Launches Working Capital Support Program for Suppliers & Subcontractors in Key Industries

The government announced its plans to launch Working Capital Support Program (WCSP) using the key industry stabilization fund at the 7th Meeting of the Central Economic Response Headquarters on June 19.BACKGROUNDThe government and banks have increased the availability of financial support for businesses in corporate loans and maturity extensions to help them tide over the COVID-19 crisis. Despite an increase in the availability of financial support, access to financial support remains difficult for many suppliers and subcontractors with unfavorable credit histories. As these suppliers and subcontractors make up the core of the key industries’ ecosystem, it is essential to provide them with additional financial support to maintain competitiveness of these industries. Against this backdrop, the government will introduce the Working Capital Support Program (WCSP) financed by the key industry stabilization fund to extend working capital loans to suppliers and subcontractors.WORKING CAPITAL SUPPORT PROGRAM(SIZE) Up to KRW5 trillion in working capital loans(SUPPORT TARGET) Companies (a) established before May 1, 2020, (b) with SME or middle market enterprise standing, (c) in business sectors eligible to receive support from the key industry stabilization fund, (d) deemed as an essential player within the industry in terms of maintaining the industry competitiveness, protecting jobs and maintaining supply chains, and (e) expected to face shortages in working capital due to the pandemic-induced economic slowdown.(LENDING INSTITUTIONS) Eligible suppliers and subcontractors are able to apply for loans at one of the program participating banks.(LOAN SPECIFICS) Working capital loans (WCLs) (a) cannot be used to pay off debt from existing loans, (b) will be issued up to the amount necessary for the operation of business, or up to KRW100 billion (2 percent of the total amount available for WCSP) or 50 percent of annual sales revenue, (c) have two-year maturity, and (d) have int
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Jun 19, 2020

Government Announces KRW2 Trillion-plus Financial Support for Auto Parts Sector

The government introduced plans to provide KRW2 trillion-plus financial support for the auto parts industry at the 7th Meeting of Central Economic Response Headquarters held on June 19.BACKGROUNDThe auto parts sector relies heavily on facilities investment and external factors. The proportion of financially vulnerable parts makers with shallow credit records remains high. Especially with the COVID-19 pandemic, the parts makers face deterioration of financial soundness and difficulties in raising capital.The government has been in close discussion with the auto industry and the financial sector including policy banks to come up with the below support package for the auto parts businesses struggling from the pandemic.KEY MEASURESThe KRW2 trillion-plus financial support package includes six loan and guarantee programs as well as extensions for existing loans or guarantees. This package is aimed at supporting auto parts businesses with middle market enterprise standing and those with mid to low credit ratings, the ones that have not been covered by the previously introduced support measures.I. KRW300 BILLION IN GUARANTEES BY KOREA CREDIT GUARANTEE FUND- KRW270 billion in guarantees linked to loans issued by KDB (End of June)- KRW30 billion in a project joint guarantee (In July)Additional capital injection from the industry and local governments is currently in discussion.II. KRW1.65 TRILLION IN LOANS BY POLICY BANKS- KRW175 billion in loans by KDB and IBK each for parts makers with SME or middle market enterprise standing and weak credit records (End of June)- KRW300 billion private debt fund (PDF) created at KAMCO to support first-tier subcontractors based on their accounts receivable (End of June)- KRW1 trillion in working capital loans with preferential interest rates by KDB for subcontractors with previous records of supplying parts to automakers (Immediately)III. OTHER SUPPORT MEASURES- Overseas loans expected to be available for auto parts factories located abroad
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Jun 18, 2020

Vice Chairman Holds Meeting to Review Risks in Financial Sectors

Vice Chairman Sohn Byungdoo held a meeting to review market conditions and risk factors in the financial industry on June 18 with experts from the public and private sectors.The following is a summary of Vice Chairman Sohn’s remarks.(END-OF-QUARTER-EFFECT IN JUNE) In March, the global spread of the COVID-19 infection, rising instability in financial markets and the end-of-quarter shortage in capital supply led to difficulties in the corporate bond and short-term money markets. In response, the government launched various financial support and liquidity injection measures, including a bond market stabilization fund and an SPV to purchase lower-rated corporate bonds and CP. As a result, the markets have begun to show signs of recovery with yield spreads growing at a slower rate.However, blue chip companies and non-blue chip companies face different conditions for issuing bonds. In June, a total of KRW68 trillion worth of corporate debt will be up for maturity (KRW12.2 trillion in corporate bonds and KRW55.5 trillion in CP and short-term debt). About 90 percent of them are high rated debt and will face not much obstacle in meeting debt obligation. The securities firms with margin call obligations related to equity-linked securities are maintaining foreign currency liquidity in case of global stock price fall. Thus, the liquidity problem is not a major concern.The government will temporarily ease the liquidity requirements of repo sellers to prevent a surge in cash demand at the end of June. The government will also provide support through policy banks’ corporate bond and CP purchase programs.(INVESTOR PROTECTION WITH DERIVATIVES PRODUCTS) With investors’ interest in derivatives products growing, the volumes of FX margin trading and CFD transaction by retail investors have increased significantly this year. For FX margin trading, the proportion of retail investors is very high at about 92 percent, despite the implementation of various measures, such as stricter ru
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Jun 17, 2020

FSC Maintains Close Market Monitoring in Wake of North's Provocation

Vice Chairman Sohn Byungdoo held a market monitoring meeting on June 17 prior to the market opening to review market conditions in the wake of North Korea’s bombing of the inter-Korean liaison office building yesterday.Despite a momentary spike in offshore forward exchange rate, volatility has largely subsided including in major stock markets around the world and in Korea’s credit default swap premium for 5-year foreign exchange stabilization bonds.Experts at home and abroad see that North Korea’s provocation will have limited impact on the financial markets, while suggesting the need to keep a close eye on future developments.Amid rising volatility in stock markets and growing concern over another spread of COVID-19, the government will intently monitor market conditions and watch out for any spillover effects from geopolitical risks while preparing appropriate responses.* Please refer to the attached PDF for details.
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Jun 16, 2020

Plans to Promote Crowdfunding

FSC Chairman Eun Sung-soo held a meeting with relevant officials from the public and private sectors on June 16 and unveiled the government’s plans to promote crowdfunding.CHAIRMAN’S REMARKSOver the past four years, many firms, agencies and investors have joined efforts to promote venture capital market through crowdfunding. As the term “crowdfunding” has its origins in “crowdsourcing,” it is distinct from other investment methods using the “wisdom of crowd.” As there have been many successful crowdfunding cases, the role of crowdfunding as an “untact” fundraising and investment mechanism is expected to grow in the future.In this regard, the FSC has prepared specific plans to promote crowdfunding to support the growth of innovative start-ups and SMEs through venture capitals and strengthen foundations to foster an ecosystem for innovative solutions in financial services.The changes in our work environment and lifestyles brought about by the COVID-19 pandemic, such as telecommuting and online shopping, may present opportunities for innovative firms. In order to sustain further development of crowdfunding, trust building is important. Therefore, fostering a trustworthy crowdfunding market requires a high degree of responsibility from crowdfunding intermediaries and other relevant institutions.KEY MEASURESAs the crowdfunding system is transitioning from an adoption period to a take-off stage, the government will work to (a) bolster its role of supporting innovative firms by improving the rules for businesses, investors and intermediaries and (b) create an accountable investment market through an expansion of support from policy banks and investor protection measures.I. EXPANDING THE SCOPE OF ISSUERS AND LIMIT ON CAPITAL RAISE(a) The scope of issuers will be expanded from non-listed start-ups and venture companies to non-listed small- and medium-sized enterprises.(b) The annual cap on issuing securities will be raised from KRW1.5 billion to KRW3 bill
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Jun 16, 2020

Vice Chairman Underscores Support for Real Economy Sectors

FSC Vice Chairman Sohn Byungdoo held the 8th financial risk assessment meeting on June 16 to assess the financial market conditions and check the implementation status of the COVID-19 financial support.The following is a summary of Vice Chairman’s remarks.(CURRENT SITUATION) Last week, the OECD released its forecasts for global economic growth based on the “single-hit” and “double-hit” scenarios of the spread of the infection. Compared to its announcement in March, the 2020 and 2021 forecasts were largely revised down. Meanwhile, the OECD indicated Korea as a “notable outlier” as the country’s effective quarantine measures and prompt financial assistance led to the slightest fall in the expected growth forecast.Despite signs of stability in the financial markets, the real economy sectors continue to struggle, with exports and employment showing continuous declines. This discrepancy exists because the sufficient level of liquidity in the markets cannot reach the businesses with unfavorable credit histories. As such, the government will work to reduce this discrepancy between the financial markets and the real economy sectors.(SUPPORT FOR SMES AND REAL ECONOMY SECTORS) From January to May, SME loans increased KRW48.6 trillion, and according to an FSS review, small-scale businesses and SMEs with lower credit backgrounds were also able to access loans.However, the government’s financial support is not being felt by many businesses. To address their needs, financial companies should utilize their know-hows in risk-pooling, capital raising and risk management to more readily assist the businesses struggling with liquidity problems.The government will continue to work on providing supports to the real economy sectors through a range of financial assistance programs including a lower-rated corporate bond and CP purchase program, a special loan guarantee program for auto industry, a corporate asset purchase program and an expansion of P-CBO issuance. The go
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Jun 15, 2020

FSC Chairman Vows Support for Auto Industry

FSC Chairman Eun Sung-soo visited Korea Fuel-Tech Corporation on June 15 in Seongnam-si and held talks on ways to provide effective assistance to the car and auto parts industries struggling with the pandemic-driven economic crisis.The following is a summary of Chairman Eun’s remarks.(GOVERNMENT’S RESPONSE TO PANDEMIC) The government has taken multipronged approaches to stabilize markets and provide businesses with financing assistance. The KRW175 trillion-plus financial support package consists of the bond market stabilization fund, P-CBO support for corporate bond markets, emergency loans and preferential guarantees. The KRW40 trillion key industry stabilization fund has been launched which will begin providing support in June. Also, a special purpose vehicle in the amount of KRW10 trillion will be ready for purchasing lower-rated corporate bonds and commercial paper as soon as the 3rd supplementary budget is passed at the National Assembly.Backed by these measures, about KRW42.5 trillion in SME loans has been issued between January and May 20 this year, which amounts to approximately 84 percent of total SME loans issued last year. Also, instability in the stock markets and corporate bond market has been largely subsided.(SUPPORT FOR AUTO INDUSTRY) The government has made available about KRW5 trillion worth of financial support to the auto industry since February. However, the entire industry is struggling with a sharp fall in exports and shortage of work due to the shock in the global supply chain and overseas factory shutdowns.In particular, SMEs and middle market enterprises are burdened with additional hardship as they face limited access to loans due to thin credit records.(FURTHER PLANS) In order to minimize the pandemic’s damaging effects on the auto industry, close cooperation should take place between the government, industry and financial institutions. While promoting ways to help businesses to boost credit standing on their own, the government wil
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Jun 11, 2020

FSC Chairman Highlights the Role of Finance in Post-pandemic Economy

FSC Chairman Eun Sung-soo attended the Financial Development Review Committee meeting on June 11 and spoke about the crucial role of finance in a post-COVID-19 era economy.The following is a summary of Chairman Eun’s remarks.CHANGING ENVIRONMENT CAUSED BY PANDEMICThroughout history, large-scale epidemics triggered structural changes in social and economic orders. The COVID-19 pandemic, too, will bring an irreversible paradigm shift in the political, economic and social orders throughout the world. Many experts expect that a return to normalcy will not be possible. Therefore, forecasting the new paradigm and preparing for changes are important tasks.(CHANGING INTERNATIONAL ORDER) The future of the Korean economy will depend on how well we prepare for protectionist trade policies and structural changes in global trade order and supply chains.(CHANGING PATTERNS IN PRODUCTION, DISTRIBUTION CONSUMPTION) Started as a mere phenomenon, access to ‘untact’ or non-face-to-face services has grown to become a part of ordinary economic activities. The changing patterns of production, distribution and consumption, such as more use of telecommuting, ‘untact’ economic services and online shopping, are expected to bring about fundamental changes in the economic structure.In this regard, digital transformation is no longer an option but a necessity. The Korean economy’s future competitiveness hinges upon how swiftly and effectively we carry out digital transformation for changing patterns in our economic activities.(GROWING DEMAND FOR SOCIAL SAFETY NET) The COVID-19 pandemic has awakened our awareness for the safety of society. More attention is paid to inclusive economic policies. The changes in global supply chains and digital transformation will unfortunately lead to job losses in some sectors and create polarization. As such, the demand for social and economic safety nets is expected to increase.ROLE OF FINANCE IN POST-PANDEMIC ECONOMYAgainst this backdrop, the committ
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Jun 11, 2020

Government Launches KRW2 Trillion-plus Program to Purchase Corporate Assets

The government announced its plans to launch a KRW2 trillion-plus program to purchase corporate assets at the 6th Meeting of the Central Economic Response Headquarters on June 11.BACKGROUNDIn order to provide liquidity and bolster financing options for businesses amid the pandemic, the government has made available KRW175 trillion-plus in financial support programs, from which about KRW52.6 trillion has been provided as of June 8.Aside from the government-backed financing programs, companies have been selling off their assets to boost liquidity. Asset sell-offs are an important strategy for corporate restructuring and improving company’s financial structure. For companies’ self-rescue efforts to be effective, asset sell-offs should take place at fair prices.To facilitate this, the government will set up a special purpose vehicle (SPV) at the Korea Asset Management Corporation (KAMCO) to purchase corporate assets at fair prices, stimulating private sector demand for corporate assets.KEY DETAILSA KRW2 trillion-plus SPV will be created through bond issuance from KAMCO with the possibility of expanding the fund size with participation from the privately managed funds. KAMCO will work to increase its funding capacity by making investments in assets with different term periods.The SPV will purchase assets held by all sized companies but will primarily invest in assets that are unlikely to attract sufficient demand in the market. An input from outside experts, such as accounting firms, will be used to help establish objective and balanced pricing standards.Based on the characteristics or types of assets and considering the future possibility of buybacks, the SPV will adopt different buying strategies—(a) buy and hold, (b) sale and leaseback, and (c) sale and call option agreement.The Corporate Structure Innovation Support Center run by KAMCO will function as a platform to promote information sharing and act as an intermediary between sellers and buyers. It will promo
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Jun 11, 2020

Financial Policy Tasks for H2 2020

FSC Chairman Eun Sung-soo held a press briefing on June 11 and laid out the government’s financial policy plans for the second half of 2020.FINANCIAL RESPONSE TO COVID-19 PANDEMICFor the most part of the first half 2020, the FSC has focused on the financial support measures in response to the COVID-19 pandemic. The FSC will continue to work on the provision of prompt support through the KRW175 trillion-plus financial assistance programs.(CURRENT STATUS OF RELIEF PROVISION) The key industry stabilization fund launched on May 28 will be operational and begin to provide supports in June. As of the end of May, about KRW1.2 trillion in P-CBOs has been issued in support of the corporate bond market, with the June issuance of more than KRW1 trillion in pending. The KRW10 trillion special purpose vehicle (SPV) will be launched to provide support for purchasing low-rated corporate bonds and commercial paper as soon as the 3rd supplementary budget is passed at the National Assembly.The government expects that each type of the aforementioned support program will complement the others and helps minimize loopholes in providing financial assistance to the businesses in need.(CORPORATE ASSET PURCHASE PROGRAM) The government introduced a KRW2 trillion corporate asset sales support program this morning, through which the Korea Asset Management Corporation (KAMCO) will purchase corporate assets at fair prices. The government will also work on additional measures to improve the financing support for SMEs.PROMOTING INNOVATION IN FINANCIAL SERVICESWith the COVID-19 pandemic, some of the key policy tasks put forward at the beginning of the year have been pushed back in terms of policy priority. During the second half, the FSC will redirect efforts at promoting innovation while also balancing the changes brought about by the pandemic.(TARGETED SUPPORT FOR 1,000 INNOVATIVE FIRMS) It is expected that the first 20 business areas will be selected within the next month by the relevant minist
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Jun 10, 2020

Houshold Loans, May 2020

The outstanding balance of household loans in all financial sectors rose KRW3.6 trillion from the previous month in May 2020 (up 5.2% year-on-year).By type, mortgage loans increased KRW3.7 trillion in May (up KRW1.9 trillion year-on-year). Regular mortgage loans, jeonse loans and group lending expanded KRW3.9 trillion in the banking sector, while non-banks saw a drop of KRW200 billion. Other types of loans fell KRW30 billion (down KRW4.0 trillion year-on-year) due to a drop in credit card loans and policy loans.The government will continue to closely monitor trends in household loans amid the COVID-19 pandemic.* Please refer to the attached PDF for details.
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