Press Releases - Financial Services Commission

Press Releases

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Apr 13, 2017

New Approach to Corporate Restructuring

FSC Chairman had a meeting with CEOs of commercial banks on April 13 to set out a new approach to corporate restructuring. The new approach was outlined to complement the existing framework of corporate restructuring; and to shift its focus to more market-based restructuring schemes, in which capital market players including private equity funds (PEFs) play a bigger role in corporate restructuring.I. BACKGROUNDThe existing system led by creditor banks has limits as companies today, which used to heavily rely on bank loans, are increasingly using capital markets for fundraising via issuance of corporate bonds or commercial papers (CPs). Such a change made the process of adjusting the interests of creditors more complex and difficult. Against this backdrop, the FSC outlined a new approach to corporate restructuring aimed at improving the current restructuring system led by creditor banks and stimulating capital market-based restructuring schemes through PEFs.II. NEW APPROACH TO CORPORATE RESTRUCTURING1. Credit Risk Evaluation System To Be Improved▪ Banks will be required to revise their credit risk evaluation models and procedures withinthe second half of this year to make more accurate and rational evaluations so that they could sort out troubled companies to be put under restructuring in a timely manner.▪ For companies under a workout program led by creditor banks, banks will have to adoptstricter evaluation standards to decide whether to continue the workout program or not. If the workout program proved inefficient, the company undergoing the workout would swiftly turn to alternative schemes such as a buyout plan led by PEFs or court receivership including the newly-introduced ‘Pre-packaged Plan’ (or ‘P-Plan’).▪ For those who have been under workout program for more than three years, an extensionof the workout period will be permitted only in exceptional circumstances after a thorough evaluation by an external auditor.2. Market-based Restructuring Sch
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Apr 03, 2017

Korea's 1st Internet-only Bank Open for Service

‘K bank’, Korea’s first internet-only bank is officially launched on April 3 for service.At the opening ceremony, Financial Services Commission Chairman Yim Jong-Yong emphasized three significant meanings of the launch of K bank. First, K bank has already brought about a new wave of competition in the banking sector. Second, financial consumers will be able to enjoy numerous benefits including lower banking transaction cost, more convenient banking services, and easier access to loans compared to those provided by commercial banks. Third, more descent quality jobs will be created in the banking, IT, and fintech sectors.K bank will supply mid-interest rate loans worth KRW 500 billion for the next three years. It will start with providing retail banking services and its business scope will be widened to include mortgage loan, payment services, foreign exchange, and fund sales in time.K bank acquired preliminary approval for banking business in November 2015, and final approval in December 2016.*Please refer tothe attachedPDF for details.
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Mar 12, 2017

FSC Holds Emergency Meeting on Financial Markets after Court Ruling on Presidential Impeachment

FSC Chairman Yim Jong-yong convened an emergency meeting on Sunday, March 12 with top officials from the Financial Supervisory Service(FSS) and other relevant financial institutions to monitor market effects and discuss policy responses after the Constitutional Court’s decision on last Friday to uphold the parliamentary vote to impeach the country’s President.Korea’s financial market remained calm even in the face of an unprecedented situation of presidential impeachment. Global investors and foreign media generally view that the court’s ruling has eliminated a considerable amount of uncertainty, which would help boost consumption and investment in the Korean economy. However, there is a possibility of further market fluctuations depending on political developments including the upcoming presidential election. We also face external uncertainties such as the Fed’s possible rate increase and growing security tension involving North Korea’s nuclear threat.Against this backdrop, the government will stay alert to internal and external risks and take swift actions, if necessary, with a 24-hour emergency response system already in operation since last year. In a pre-emptive move to stabilize corporate bonds market after the U.S. interest rate hikes, policy banks are ready to inject a total of KRW900 billion in helping smaller companies issue corporate bonds. The government will crack down and strongly discipline market-disruptive activities to capitalize on the upcoming presidential election, while tightening its monitoring over possible cyber attacks against financial institutions. We will continue to manage household debt risks in a preemptive manner with a particular focus on the recent rapid growth in the non-banking sector and high-risk loans. The government will continue corporate and industry restructuring as planned to ease market concerns.* Please refer to the attachedPDF for details.
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Jan 05, 2017

Financial Policy Direction for 2017

The FSC outlined its financial policy direction for 2017, focused on (i) prompt and thorough response to financial market risks; (ii) financial support for stabilization of household livelihood; and (iii) financial reforms and innovation to revitalize the economy.I. Prompt and thorough response to financial market risks Financial market stability- The FSC will closely monitor financial markets to keep risk factors under control through a 24-hour emergency response system.- Measures will be taken to stabilize corporate bond market to ensure stable funding conditions for companies in response to increased volatility in financial markets. Household debt management- Guidelines on stricter screening of loan applications will be expanded to all financial institutions to make sure borrowers take loans that they can afford and repay in installments.- The FSC will set out a roadmap in the first quarter of 2017 for improved standards for screening a borrower’s creditworthiness - e.g. gradual introduction of debt service ratio (DSR) as a tighter standard to assess a borrower’s debt repayment ability. Corporate restructuring- Corporate restructuring will be carried out under consistent principles that emphasize a troubled company’s self-rescue efforts and burden sharing.- A new framework for corporate restructuring (‘Pre-packaged Plan’), which combines advantages of creditor-led debt workout and court-led rehabilitation, will be promoted to expedite business normalization of a troubled company. Sound financial market practice- The FSC will promote more transparency in corporate management and financial transactions by improving the current accounting and audit system, encouraging the introduction of ‘stewardship code’ to a wider range of companies and establishing sound financial market practice.II. Financial support for stabilization of household livelihood Microfinance support for low-income borrowers- The government will increase its injection of
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Dec 29, 2016

FSC Identifies D-SIBs for 2017

The FSC identified domestic systemically important banks (D-SIBs) for 2017: Shinhan Financial Group, Hana Financial Group, KB Financial Group, NH Financial Group and Woori Bank. Those selected as D-SIBs are required to hold an extra capital of 1%, by 0.25% per year in from 2016 to 2019. ※ The average BIS ratios for banks and bank holding companies at the end of September 2016 exceed the minimum requirements; therefore, there is no actual burden at present for D-SIBs to set aside additional capital. The FSC selects D-SIBs every year from 2016 in accordance with assessment criteria proposed by the Basel Committee on Banking Supervision (BCBS). *Please read the attached filefor details.
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Dec 14, 2016

FSC approves Korea's 1st Internet-only bank

The Financial Services Commission held its regular meeting on December 14 and granted final approval for ‘K-Bank’, Korea’s first Internet-only bank. It is the first bank newly approved in 24 years since 1992, which will spur fresh competition in the banking sector. K-Bank will start its operation in the end of January or early February 2017 (tentative) after completing preparatory works. The other internet-only bank granted preliminary approval in November 2015, Kakao Bank, is also preparing to apply for final approval in the end of this year.
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Dec 11, 2016

FSC Holds Emergency Meeting on Financial Markets after Impeachment Vote

FSC Chairman Yim Jong-yong convened an emergency meeting on Sunday, December 11 with top officials from the Financial Supervisory Service(FSS) and other relevant financial institutions to monitor market effects and discuss policy responses after parliament’s impeachment vote last Friday. The impeachment vote is likely to have a limited impact on financial markets. Major Korean indexes traded on overseas markets remained stable in early Saturday morning after Friday’s impeachment vote. However, the government will stay alert to external uncertainties including widely expected Fed rate increases and policy changes with new U.S. administration, problems in Europe’s banking sector and worries about China’s currency markets. To ensure stability and investors confidence in Korea’s financial markets, the government will extend the current 24-hour emergency response system jointly run by the FSC and FSS to all industry associations and public institutions across the financial sector. We will hold a weekly meeting to monitor market conditions and make sure swift and timely responses. Korea’s financial market and financial system have shown strong resilience as we overcame the Asian financial crisis in 1997 and the global financial crisis in 2008. Throughout this year as well, our financial markets maintained stability and firmly supported the real economy, despite external and internal uncertainties. The Korean economy’s fundamentals and creditworthiness are strong enough to respond to market uncertainties and difficulties. * Please read the attached file for details.
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Nov 24, 2016

Follow-ups on the Household Debt Management Measures Announced on Aug.25

The FSC announced follow-up measures on household debt management as the measures announced on August 25, 2016 started to show a sign of policy effects, particularly in slowing down the pace of household debt growth in the non-banking sector and collective lending. Since the August 25 measures took effect, collective lending for apartment buyers and non-residential mortgages from the mutual banking sector fell significantly. (i) The outstanding balance of collective loans remains on the rise as loans for middle payments for previously-signed contract were taken out. However, the amount of newly approved loans for middle payments to purchase an apartment sharply fell in October.(ii) The growth pace of household loans in the mutual banking sector started to slow down in November since the loan-to-value ratios on non-residential mortgages in the sector were tightened on October 31. The follow-up measures are aimed to extend tighter screening standards for loan approvals, to collective mortgages and loans from mutual finance institutions, which have been under less strict standards than bank mortgages. Guidelines for loan screening will be applied to such collective loans and mutual finance loans as well, under the principle that household debt should be borrowed within the borrower’s repayment ability and repaid in installments from the beginning.- For pre-sale of new apartments after January 1, 2017, home buyers’ collective loans to pay the remainder of the money will be subject to tighter screening standards, as currently applied to banks’ mortgages. - Mutual finance institutions will establish and implement their guidelines for screening loan applications in the first quarter of 2017. - The debt service ratio(DSR) will be used as a reference from early December whenfinancial institutions screen loan applications and assess borrowers’ repayment ability. * Please read attachedf file for details.
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Nov 22, 2016

Measures for Improvement of Derivatives Markets

The FSC announced a set of measures to make South Korea’s derivatives markets more advanced and sounder as this year marks the 20th anniversary of the establishment of derivatives markets in 1996. Key Points EXCHANGE-TRADED DERIVATIVES MARKETTo boost derivatives trading and enhance diversity of derivatives in the market, improvements will be made on both supply and demand sides. - Supply side: simplification of listing procedures, diversification of derivatives, adjustment of trading units for KOSPI200 futures and options - Demand side: flexible requirements for investors, introduction of the ‘omnibus account’ for foreign investors  OVER-THE-COUNTER(OTC) DERIVATIVES MARKETRisk management system will be established with the introduction of global regulatory standards such as margin requirements for non-centrally cleared derivatives and electronic trading platforms. DERIVATIVE-LINKED SECURITIES MARKETThe FSC will strengthen risk management and investor protection, while pursuing more diversification of products to meet various investment needs. - For ELS DLS markets, stress tests will be conducted on regular basis to strengthen risk management of securities firms. To enhance transparency in fund management, assets of ELS issuance and management will be separately managed. - Investor protection will be strengthened in ELS DLS markets with the introduction of tougher “Know-your-Product Rule” and a “cooling-off period” for investors. - Development and listings of more derivatives-linked products will be promoted as alternatives to ELS products. Detailed Measures1. EXCHANGE-TRADED DERIVATIVES MARKET Supply Side(1) Simplification of listing procedures Listings of derivatives linked to new underlying assets, which currently requires the FSC’s approval, will be streamlined. Relevant rules will be revised to allow the KRX to decide on the listings of new derivative products, while the FSC will only approve the scope of the underlying assets. (2) Di
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Nov 13, 2016

Seven Investors Were Picked to Buy Government's Stake in Woori Bank

*Please read the attached file for details.The government decided to sell its 29.7% stake in Woori Bank to seven investors on its fifth attempt to privatize Woori Bank since 2010. The seven final winning bidders and amount of shares auctioned to each bidder are as follows: Investors % of auctioned shares1 Eugene Asset Management 4.0%2 Hanwha Life Insurance Co., Ltd. 4.0%3 IMM Private Equity, Inc. 6.0%4 Kiwoom Securities Co., Ltd. 4.0%5 Korea Investment Securities Co., Ltd. 4.0%6 Mirae Asset Global Investments Co., Ltd. 3.7%7 Tongyang Life Insurance Co., Ltd. 4.0%The government would recoup KRW 2.4 trillion from this sale, recovering a total of KRW 10.6 trillion out of KRW 12.8 trillion, which is 83.4% of the public funds injected into Woori Bank. We will continue our effort to sell the remaining 21.4% in Woori Bank for a full recovery of the public funds. The sale will be closed in mid-December this year. The Korea Deposit Insurance Corporation (KDIC) will terminate its MOU with Woori, signed for helping normalizing the bank’s business operation, as soon as the sale is closed, to guarantee the new shareholders autonomy in the bank’s management.
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Nov 10, 2016

Short Selling and Disclosure Rules To Be Improved

The FSC outlined its plan to improve rules for short selling and disclosure to strengthen investor protection. Short Selling Rules1. Short sellers shorting during the period of paid-in capital increase will be barred from buying the newly-issued stocks. (Amendment proposal for the Financial Investment Services and Capital Markets Act will be submitted to the National Assembly in Q1 2017) 2. KRX will designate “overheated short-selling stocks” at the close for stocks showing extraordinary increases in short selling and sharp falls in prices during the trading hours to prohibit short-selling for those stocks on the following day. (The new rule will be implemented in early 2017 after KRX revised relevant regulations) 3. Sanctions against violation of short-selling rules will be strengthened. Those who breached short-selling rules such as prohibition of uncovered short- selling or up-tick rules will be subject to heftier fines than those imposed on other violations. (KRX will revise relevant regulation in Q1 2017)  Price manipulative activities exploiting short-selling positions will be added to types of ‘Market Disruptive Activities’ under the Financial Investment Services and Capital Markets Act. (Amendment proposal for the Financial Investment Services and Capital Markets Act will be submitted to the National Assembly in Q1 2017) 4. The deadlines for reporting and disclosure of short positions in large amounts or by shares will be shortened from the current T+3 days to T+2 days. (Relevant regulations to be implemented in Q4 2016) Disclosure Rules1. Deadlines for disclosure of technology transfer will be shortened to provide investors with timely information. (To be implemented Q4 2016)  Corrections to information of voluntary disclosure should be made by 6pm on the same day of such changes, earlier than the current deadline of the following day 6pm.  Among information currently subject to voluntary disclosure, important information that could affe
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Nov 09, 2016

FSC and FSS Holds Emergency Meeting on Financial Markets

FSC Chairman Yim Jong-Yong convened an emergency meeting on November 9 with top officials from the FSS and other relevant financial organizations to respond to recent uncertainties in financial markets due to the 2016 U.S. presidential election outcome. The recent market volatility is mainly attributed to a series of external factors and has little, if there is any, correlation with matters relating to Korea’s economic fundamentals. We ask domestic and foreign investors to act in a calm manner, and have faith in the resilience of our economy and the government’s determined commitment in stabilizing the financial markets. The FSC has been closely monitoring the financial market conditions since the emergency meeting held on November 7, Monday. The Korean government will always stay alert to further market developments.*Please read the attached file for details.
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Nov 07, 2016

FSC Holds Emergency Meeting on Financial Markets

FSC Chairman Yim Jong-Yong convened an emergency meeting with top officials from the FSS and other relevant financial organizations to respond to recent uncertainties in financial markets at home and abroad. Followings are key messages from his opening remark:  The Korean economy is now facing internal and external challenges with slump in exports; slow recovery in domestic consumption; and household and corporate debt risks. However, our economy has sound fiscal health and strong fundamentals to weather these challenges. The government maintains fiscal soundness with its debt-to-GDP ratio of 35.5% at the end of 2015, which is the 4th lowest among 31 OECD countries. South Korea has the world’s 7th largest foreign currency reserve. Its short-term external debt accounts for only 29% of the foreign currency reserve, as of the 2nd quarter of 2016, which is much lower than 74% at the end of 2008. The financial system is resilient enough in terms with capital adequacy and asset soundness of financial institutions.  The government will stay alert to internal and external uncertainties and take bold and preemptive measures, if necessary, to prevent any of risk factors from spilling over into a wider financial system to threaten our economy. Starting from today, the FSC and the FSS go into an emergency operation mode with a 24-hour monitoring on financial markets, in a close cooperation with the Ministry of Strategy and Finance, and the Bank of Korea. If necessary, we will take market stabilizing measures in accordance with contingency plans in a timely manner.  We will continue to respond to household and corporate debt risks in a preemptive manner. For household debt, the government will continue our effort to improve soundness of household debt by holding the principle of ‘debt should be borrowed within repayment ability and paid back in installments.’ We will also closely monitor and respond to rapid growth of household debt in non-banking sectors. For ong
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Sep 26, 2016

Preliminary Bidding Result for Sale of Woori Bank

Eighteen investors submitted letters of intent (LOI) to buy the government’s 30% minority stakes in Woori Bank in a preliminary bidding. The amount of stakes for which the investors bid adds up to 82 to 119 percent shares of Woori Bank. * The name of individual investors and amount of the bid each investor made cannot be disclosed upon their request.The investors who submitted LOIs will be given opportunity to conduct due diligence in end-September. Shortlisted bidders will submit final offers in mid-November to close the sale by the end of the year.Schedule - Sending Information Memorandums(IM) and conducting due diligence (Sept.30~)- Deadline for submission of final offers (5:00 p.m., Nov.11)- Announcement of winning bidder (Nov.14)- Signing of contract and payment (Nov. 28)* The schedule may be subject to change depending on progress in the sale process. *Please read the attached file for details.
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Sep 09, 2016

FSC Hold Emergency Meeting Following North Korea's Suspected Nuclear Test

FSC Chairman Yim Jong-Yong convened an emergency meeting to inspect risk factors in domestic financial markets and discuss responsive measures after a seismic event was detected in North Korea at 9:30 A.M. a supposed result of North Korea’s possible nuclear test.Stock market indices and won exchange rates are showing temporary volatility. However, the FSC sees it as a consequence of disappointed investor sentiment towards ECB’s holding key policy rates and increased speculative transactions, rather than the result of North Korea risk factors. North Korea’s past provocations had almost no direct impact on Korea’s financial markets, or if it had any, the shock was temporary and limited. Yet, the FSC will remain alerted and closely monitor financial market developments since the North’s provocative actions are intensifying and we cannot rule out the possibility that the consequential impact may last longer than we expect.The FSC will share related information with agencies related to domestic financial markets such as the Ministry of Strategy and Finance, Bank of Korea, and Financial Supervisory Service (FSS). The FSC and FSS will jointly form and operate an emergency team to more effectively monitor North Korea’s movements and financial market conditions. Moreover, we will review contingency plans to be fully prepared for future situations.*Please read the attached file for details
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Sep 06, 2016

Financial Assistance to be Provided for Hanjin Shipping's Local Contractors

The Financial Services Commission (FSC) and Financial Supervisory Service (FSS) came up with measures to support Hanjin Shipping’s local contractors in a bid to minimize spill-over effects of Hanjin’s filing into small local contractors. Current Situation of Hanjin Shippings’s contractorsTotal 457 subcontractors have receivables from Hanjin Shipping, which account to approximately KRW 64 billion as of end-June 2016. (as of end-June, 2016)Supportive Measures1. Government will provide financial assistance for subcontractorsThe government will swiftly provide emergency financial assistance for subcontractors and small-to-mid sized shippers. The Korea Development Bank (KDB), Industrial Bank of Korea (IBK), Korea Credit Guarantee Fund (KODIT), and Korea Technology Finance Corporation (KOTEC) will extend maturity for principal repayment of outstanding loans and guarantees by one year. The FSS will encourage commercial banks to grant grace period and extend maturity as well.The KODIT and KOTEC will provide special guarantees for subcontractors and small-to-mid sized shippers suffering from cargo delay. Up to 90% guarantee will be provided for debts of such companies and guarantee fee will be reduced by 0.2%. The guarantee will be provided by using the KRW 800 billion restructuring fund allocated in the supplementary budget. The KDB and IBK will offer emergency financial assistance to the subcontractors with temporary liquidity shortage. The KDB will grant loans worth KRW 5 billion to small-sized firms and KRW 7 billion to medium-sized ones. The IBK will provide KRW 300 million to SMEs at a rate discounted by 0.5%p. The KODIT and KOTEC will provide special guarantee with higher guarantee ratio (90%) and lower fee (↓0.2%) for SMEs whose corporate restructuring plan has been approved by the government under the Special Act on the Corporate Revitalization. The KDB will provide special loans worth total KRW 2 trillion to SMEs willing to restructure their business thr
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Sep 02, 2016

Follow-up Measures on Hanjin Shipping's Filing for Court Receivership

FSC Chairman Yim Jong-yong held a meeting on September 1 with the Korea Development Bank (KDB) and Hyundai Merchant Marine (HMM) to discuss follow-up measures regarding Hanjin Shipping’s filing for court receivership. Chairman Yim asked the KDB and HMM to exert their utmost concerted efforts to minimize problems with cargo delivery and shippers in the aftermath of Hanjin’s filing for bankruptcy protection. 1. HMM will immediately go into emergency management to minimize disorder in cargo delivery and damage to shippers. HMM will add to its sea routes the ones which used to be serviced exclusively by Hanjin Shipping – 1 in America, 1 in Europe – and start servicing of more than 13 additional ships as soon as possible. HMM will maintain freight rates for the newly-established routes to an appropriate level to ensure shippers should not face excessive increase in freight rates. 2. The Seoul Central District Court will soon determine whether to accept Hanjin Shipping’s filing, however, since we cannot completely rule out the possibility of Hanjin’s liquidation HMM will immediately form a task force to review its possible acquisition of Hanjin’s healthy assets. The TF will sort out and review Hanjin’s profitable vessels, overseas sales network and key work forces, and devise detailed plan to sell the assets to HMM. *Please read the attached file for details.
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Aug 31, 2016

FSC Statement on Hanjin Shipping's Filing for Court Receivership

FSC Vice Chairman Jeong Eun-bo held a meeting on August 31 with officials from relevant agencies to discuss the possible government’s responses following Hanjin Shipping’s decision to file for court receivership. 1. Impact on financial market will be limited.Hanjin’s filing for court receivership will have only limited impact on financial markets as the event has been already reflected to a considerable extent in the process of restructuring. In the stock market, Hanjin Shipping accounts for 0.03%, worth KRW 401 billion, of Kospi’s market capitalization. Its share price has declined 53.8% from KRW 3,540 per share on January 2 to KRW 1,635 on August 29, 2016. The impact on corporate bond market will be limited as credit ratings of Hanjin Shipping and Korean Air Lines already factored in the event. 2. Impact on financial institutions and corporate bond investors will be limited as well. Creditor banks have set aside loan loss provisions against most of possible losses. The additional amount of loan loss provisions the banks need is estimated to be KRW 0.3 trillion as Hanjin Shipping files for court receivership. The outstanding issuance of corporate bonds has continuously decreased in the restructuring process so far from KRW 2.2 trillion at end-2013, KRW 1.7 trillion at end-2014, KRW 0.8 trillion at end-2015, to KRW 0.5 trillion at end-June, 2016. Most of issued bonds are held by institutional investors. 3. The government will promote acquisition of Hanjin Shipping’s healthy assets by Hyundai Merchant Marine in a bid to maintain competitiveness of the shipping industryIn response to the market concern over the shipping sector, one of Korea’s key industries, the government will make sure to maintain the shipping industry’s competitiveness. Hyundai Merchant Marine (HMM) would acquire Hanjin Shipping’s core assets such as ships, overseas sales network and key work forces to retain Hanjin Shipping’s competitiveness as much as possible. 4. The government
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Aug 30, 2016

World's First Fintech Open Platform Launched to Ease Develoment of Innovative Fintech Services

Fintech Open Platform is launched in Korea for the first time in the world on August 30 in a bid to ease Fintech firms develop innovative financial services. Fintech Open Platform is a combination of a website where Fintech firms can download program commands used for development of Fintech services, and a physical space where they can run test operations of the programs they developed. Open API SystemOpen API system within Fintech Open Platform provides program commands needed when programming Fintech services with banking functions including money transfer and balance check in the form of standardized application programming interface (API). Until now, Fintech service developers had to sign separate contracts with each commercial banks in order to embed banking services in their programs. For example, even if a Fintech firm signed a contact with Bank A and launched a money transfer application linked with the bank, it had to sign different contracts with other banks separately because the program isn’t compatible with other banks. However, with the introduction of open API system, in order for a Fintech firm to develop a Fintech service with banking functions it simply has to download program commands which 16 commercial banks and 25 securities companies provide in a single unified format. For instance, a Fintech company can develop a housekeeping book application with bank balance check function just by downloading a balance check API from the open API system. As such, the launch of Fintech Open Platform will significantly reduce time consumed for developing Fintech services. Future PlanThe Korea Financial Telecommunications Clearings Institute and Koscom will provide virtual data and simulation environments for Fintech firms to run test operations of their Fintech services, and offer technology consulting services. The Financial Security Institute will ensure stability of Fintech services and financial consumer safety before the launch of the services.*Please
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Aug 26, 2016

Comprehensive Measures for Management of Household Debt

The government announced its new set of measures to manage the growth of household debt in a stable manner in response to the recent surge in household debt. As the recent growth of household debt are attributed to rapid increase of collective lending for home buyers and loans from the non-banking sector, the new package of measures mainly focuses on 1) curbing oversupply in the housing market; 2) tightening monitoring on collective lending for home buyers; and 3) strengthening risk management of non-banking sector loans.Key Points1. The new package of measures includes measures to address oversupply in the housing market as a way to manage household debt, while the previous measures so far were mainly focused on financial measures to improve the structure of household debt, boost household income and protect mid-to-low income households. 2. The government will strengthen its monitoring and management on collective lending, under relatively loose screening standards, given the unique characteristics of pre-sale scheme, in which the ownership of apartments is sold before they are built.  Guarantees for collective loans by Housing Finance Corporation (KHFC) and Korea Housing Urban Guarantee Corporation (KHUG) will be cut from 100% to 90% of the loan value; and the number of guarantees by the two institutions will be capped at two per borrower.  Under the new measure, banks will be required to strengthen monitoring and management risks in collective lending by securing borrowers’ income data and making on-site inspection on construction projects.  Low-and-middle-income borrowers will be granted favorable interest rates if they choose fixed-rate and amortizing loans when they make loans for middle payment for home purchase. 3. The government will also tighten monitoring and management on mortgages in the non-banking sector and commercial property-backed loans by applying tighter screening and improving loan repayment structures. The loan-to-value ratio for co
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