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Sep 08, 2020
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Sep 01, 2020
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Aug 27, 2020
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Aug 27, 2020
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Aug 24, 2020
- Vice Chairman Discusses Preemptive Responses to Potential Risks amid Growing Uncertainty
- Vice Chairman Sohn Byungdoo presided over the 18th financial risk assessment meeting on August 24 to review market conditions and monitor the progress in implementing the COVID-19 financial support.The following is a summary of Vice Chairman Sohn’s remarks.(CURRENT MARKET SITUATION) The government’s effective response to Covid-19 and aggressive financial support have helped to maintain stability in financial markets. The KOSPI has recovered to pre-crisis levels, gaining 58.1 percent from its lowest in mid-March. Corporate bond and short-term money markets also have shown signs of overall recovery, although some low-rated companies still face difficulties in securing funds. However, the government should remain vigilant as the recent resurgence of Covid-19 cases heightens uncertainty in financial markets and the real economy. In response to the possibility of a protracted pandemic crisis, the government will closely monitor risk factors and take preemptive measures when necessary.(FINANCIAL MARKET MONITORING) With low interest rates, funds searching for higher returns have been increasingly flowing into stock and property markets, prompting a surge in asset prices. As the concentration of funds to certain assets along with growing debt could pose potential risks to financial markets, the government has been closely monitoring market activities.For the stock market to grow into a sustainable and attractive investment destination, the government needs to ensure the sound operation of the market and encourage more listings of promising companies. To this end, the government will come up with comprehensive measures for prevention, investigation and punishment to root out unfair transactions such as market manipulation, while improving regulations to help channel more funds into innovative businesses with long-term perspectives.(IMPLEMENTATION OF HOUSING MARKET MEASURES) The government has taken a series of measures to curb speculative demand in housing markets, while
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Jul 30, 2020
- Plans to Improve Rules on Structured Products
- The FSC announced its plans to improve rules on retail structured products on July 30, with an aim to strengthen securities firms’ preparedness for market volatility, to encourage reduction in the size of the issuance as well as diversified investment for hedge assets and to bolster investor protection measures.BACKGROUNDThe market for retail structured products has grown significantly as the continuing trend of low interest rates made them an attractive alternative to bank savings. Although the structured products have provided relatively high yields and helped individuals to expand their assets, various risk factors began to surface. For securities firms, large volume of structured product issuance and management pose significant burdens on their financial soundness and liquidity. These burdens also may create shocks in the foreign exchange market and short-term money markets. In addition, both distributors and investors often espouse misperception that structured products are safe and non-risky products even though market volatility may rise depending on the performance of underlying assets. Therefore, it is necessary to draw up measures that will help minimize risks to securities firms, financial markets and investors.OVERVIEW OF STRUCTURED PRODUCTS(BALANCE) The outstanding balance of ELS, ELB, DLS and DLB issuance surged from about KRW22 trillion in 2010 to KRW108.6 trillion at the end of April 2020, maintaining an above KRW100 trillion level since 2016. About 60 percent of them are non-principal-protected structured products (ELS and DLS), accounting for KRW64.6 trillion. ELS and ELB (tracking stock indexes) account for 70 percent, or KRW75 trillion.(DISTRIBUTION) For ELS investment, retail investors made up about 98 percent, or KRW40.4 trillion at the end of March 2020. About 82 percent of all ELS issuance, or 88 percent of ELS issued to retail investors were distributed through banks.(RISK FOR SECURITIES FIRMS) Structured products make up increasingly larg
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Jul 24, 2020
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Jun 25, 2020
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Jun 23, 2020
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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 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 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 09, 2020
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May 27, 2020
- 2020 Online Korea Fintech Week
- The 2nd Korea Fintech Week will be held virtually starting at 10 am on May 28. It is organized into five sessions, and the virtual exhibitions are open to everyone for viewing at free of charge via www.fintechweek.or.kr/2020. SCHEDULE(OPENING SESSION) Welcoming remarks by FSC Chairman Eun Sung-soo and congratulatory remarks by key dignitaries including Lord Mayor of the City of London William Russell and Standard Chartered CEO Bill Winters(SPECIAL SESSIONS) Presentations and seminars on ‘open innovation,’ showcasing major policy and industry trends at home and abroad► FSC: Fintech in Korea and digital transformation strategy in financial sectors► KFTC: Open banking in Korea► FSI: Financial data security in the 4th industrial revolution► VISA-Fintech Center Korea: Sharing successful collaboration lessons between global financial company and fintech► MAS: Future of fintech in post-COVID-19 era► Stone Chalk: Fintech trends in Australia► World Bank: Digital finance for crisis response and economic development – Role of the WB► KPMG: Korean fintech industry in 2020 policy trends► KOSCOM: Financial cloud computing and compliance in financial services► FSI: Security evaluation trends of cloud service providers in financial sectors► Regtech suptech showcases(VIRTUAL EXHIBITION HALLS) The six virtual exhibition halls are organized into a fintech ecosystem hall, a financial enterprise hall, a fintech start-up hall, a fintech scale-up hall, a big tech hall and a global enterprise hall, participated by about 150 entitiesTo help attract investment for the K-Growth fund, a major source of fintech investment operated by the Korea Growth Investment Corporation, a shortcut to fintech investors’ relations will be placed on top of the main page.(ONLINE JOB FAIR) HR managers from 35 financial companies and fintech firms will provide information about job openings, nature of work and qualities they look for in new hires. About a dozen companies have plans t
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May 20, 2020
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May 19, 2020
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May 12, 2020
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Apr 22, 2020
- Government Announces KRW40 Trillion Fund to Support Key Industries
- The government introduced measures to establish a KRW40 trillion fund to support key industries and help businesses retain jobs on April 22. In addition, the government will help provide more liquidity to the businesses in need through a KRW35 trillion increase in the emergency financial support package.KEY PROVISIONSI. ESTABLISHING A KRW40 TRILLION+ STABILIZATION FUND FOR KEY INDUSTRIES► SIZE: A KRW40 trillion+ new stabilization fund will be established to support key industries, which will be operated by the Korea Development Bank. The fund will be raised by issuing state guaranteed fund bonds. In addition, private funds and special purpose vehicles will also contribute to the stabilization fund.► TARGET: The fund will support key industries that have significant impact on employment and the real economy, including airline, shipping, shipbuilding, auto, general machinery, electric power and communication industries.► CONDITION: (a) The autonomy in business management will be guaranteed in principle based on the condition of self-rescue efforts. (b) Businesses will be required to work on maintaining employment when receiving the support. (c) Businesses will be subject to limitations in executive compensation, dividend payouts, and share buybacks. (d) The support will be provided in a way that allows sharing of benefits from business normalization in the future.► OPERATION: (a) Support will be provided in diverse ways through loans, payment guarantees and investments according to specific industry and business needs. (b) Investment and credit extension to related funds and special purpose vehicles will be permitted to promote inputs from private sector funding channels and their know-hows. (c) A council will be set up to ensure professionality, accountability and transparency of the fund management.II. EXPANDING EMERGENCY FINANCIAL SUPPORT PACKAGE BY KRW35 TRILLION► FINANCING SUPPORT FOR SMALL MERCHANTS (KRW10 TRILLION): The 1st stage financing support mad
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Apr 20, 2020
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Apr 17, 2020
- Financial Authorities to Temporarily Ease Regulations on Capital and Liquidity Requirements
- FSC Vice Chairman Sohn Byungdoo held a meeting on April 17 via conference call to check the delivery of the government’s COVID-19 emergency support package and financial market stabilization measures.The following is a summary of Vice Chairman Sohn’s remarks:► STRONG COOPERATION: The FSC and the FSS along with all other relevant institutions will closely cooperate in working to prevent bankruptcies and job lossess. ► ENSURING SEAMLESS IMPLEMENTATION: For guaranteed loans, the guarantee institutions had different standards for offering deferments on the principal payment. Due to an improvement in the standards, this discrepancy has been removed.► EASING REGULATIONS: In order to make sure that financial institutions providing the COVID-19 emergency support package do not face liquidity shortages, the government will temporarily ease regulations on the capital and liquidity requirements, while also working to improve the performance assessment measures for public financial institutions.FINANCIAL SUPPORT PROVIDEDBetween February 7 and April 13, a total of KRW40.9 trillion (488,000 individual cases) in loans and guarantees as well as loan and guarantee extensions were provided to the SMEs, small merchants and self-employed business that have been hit by the spread of COVID-19.► FINANCING BY TYPE: KRW19.6 trillion (352,000 cases) in new loans and guarantees, KRW19.9 trillion (120,000 cases) in maturity extensions and deferred payments, and KRW1.4 trillion (16,000 cases) in export-import credit finance, discounted interest rates and late fees and deferment of interest payment► FINANCING BY TARGET: KRW19.4 trillion (424,000 cases) to small merchants, KRW17.1 trillion (64,000 cases) to SMEs and KRW4.5 trillion (594 cases) to middle market enterprises► FINANCING BY INDUSTRY: KRW5.6 trillion (56,000 cases) to wholesale businesses, KRW3.8 trillion (111,000 cases) to restaurant businesses and KRW3.6 trillion (82,000 cases) to retail businesses► FINANCING BY PRO