Press Releases - Financial Services Commission

Press Releases

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Jul 05, 2023

FSC Announces Designation of Seven Non-Holding Financial Groups for 2023

The Financial Services Commission held the 13th regular meeting on July 5 and designated seven non-holding financial groups for 2023 pursuant to the Act on the Supervision of Financial Conglomerates. The designated entities are Samsung, Hanwha, Kyobo, Mirae Asset, Hyundai Motor, DB and Daou Kiwoom groups. This is the third time the FSC is designating non-holding financial groups (financial conglomerates) since the Act on the Supervision of Financial Conglomerates became effective in June 2021. The seven entities satisfied all designation criteria. The seven non-holding financial groups will be subject to the following rules. a) Select a financial business entity representing the entire group after considering the investment relationship, total size of asset, capital, etc. and report their selection to the Financial Supervisory Service. b) Periodically inspect and evaluate group-wide risks and prepare and follow their own internal control and risk management policy, and transparently disclose material information needed to ensure consumer protection and report to authorities. c) Draw up capital adequacy ratio reflecting risk-weighted capital based on the risk assessment conducted by financial authorities. d) Financial authorities will carry out a periodic assessment (every three years) on the risk and risk management status of non-holding financial groups. Authorities expect that the designation will help the non-holding financial groups to more effectively monitor and manage their group-wide risks on their own. * Please refer to the attached file for details.
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Jul 05, 2023

FSC Identifies D-SIBs and D-SIFIs for 2024

The Financial Services Commission identified five bank holding companies (BHCs) and five banks as domestic systemically important banks (D-SIBs) for 2024 on July 5: KB Financial Group, Shinhan Financial Group, Hana Financial Group, Woori Financial Group, NH Financial Group, KB Kookmin Bank, Shinhan Bank, Woori Bank, KEB Hana Bank and NH Bank. Those identified as D-SIBs are required to set aside an additional common equity capital of 1.0%, and the higher loss absorbency requirement will take effect on January 1, 2024. The FSC identifies D-SIBs every year in accordance with assessment criteria recommended by the Basel Committee on Banking Supervision (BCBS). Meanwhile, the FSC also identifies D-SIBs as domestic systemically important financial institutions (D-SIFIs) under the amended Act on the Structural Improvement of the Financial Industry. D-SIFIs are required to prepare and submit their own recovery plans to the Financial Supervisory Service (FSS) within three months from the day of being designated as a D-SIFI. * Please refer to the attached file for details.
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Jul 05, 2023

Financial Authorities to Promote Fair and Effective Competition in Banking Sector

The Financial Services Commission and the Financial Supervisory Service held a meeting with bank holding companies on July 5 and announced a set of measures intended to promote competition in the banking sector. The measures have been prepared after holding a series of taskforce meetings on improving the management and operating practices of banks since February this year. The key banking sector reform areas include (a) promoting competition and overhauling the industrial structure, (b) improving the interest rate system through expanded availability of fixed interest rates, (c) enhancing loss absorbing capacity, (d) increasing the proportion of non-interest revenues, (e) improving the employee remuneration system and the shareholder return policy and (f) promoting corporate social responsibility. At the beginning of the meeting, FSC Chairman Kim Joo-hyun delivered opening remarks emphasizing the need to promote fair and effective competition in the banking sector. The following is a summary of Chairman Kims remarks. Over the past four months since the end of February, the FSC and the FSS have been preparing reform measures together with private sector experts, financial industry officials and research institutions on the six key task items concerning how to improve the management and operating practices of banks. Due to the oligopolistic nature of the banking industry, there has been a widely held view among the public that banks are reluctant to make changes despite their easy profitmaking structure. Therefore, the main purpose of the reform measures prepared by the taskforce is to promote fair and effective competition in the banking sectorbut more importantly, competition driven by market forces. Authorities will work to bring about fair competition by requiring banks to provide adequate information about their business operation and products to the market so that consumers can make inform decisions. The purpose of creating an online loan transfer system introdu
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Jun 30, 2023

Revised FSCMA Strengthens Penalties on Unfair Trading Activities

The Financial Services Commission announced that a revision bill of the Financial Investment Services and Capital Markets Act (FSCMA) containing measures to strengthen penalties on unfair trading activities in capital markets was passed at the National Assemblys plenary session on June 30. The revised FSCMA creates legal grounds to impose penalty surcharge, introduce a method for calculating unfairly gained profits and grant leniency to those who report their wrongdoing voluntarily. It aims to overhaul the entire penalty system concerning unfair trading activities in capital markets from detection and prevention of stock price manipulation to administrative sanction to criminal punishment. First, the revised FSCMA establishes a provision on penalty surcharge of up to twice the amount of illegally earned profits (unfair gains), with the maximum penalty amount set at KRW4 billion when there is no unfairly gained profit or it is deemed unfeasible to calculate it. Until now, unfair trading activities in capital markets were punishable only through criminal penalties, taking a long time (two to three years) to bring penalties to the wrongdoer and lacking effectiveness in sanctions. In this regard, with the creation of penalty surcharge, economic sanctions on unfair trading activities can take place in a more swift and effective manner. Second, the revised FSCMA introduces a clear standard for calculating unfairly gained profits (total profit minus total cost generated by engaging in illicit activities). This will help ensure that the level of punishment is commensurate with the level of economic gain. Third, the revised FSCMA contains a leniency clause which makes it possible for those reporting their own wrongdoing voluntarily or testifying on others illicit activities to receive a reduction in criminal punishment or penalty surcharge. This leniency offered to whistle-blowers will help prevent and detect unfair transaction activities more effectively. The revised FSCMA
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Jun 30, 2023

Government to Ensure Virtual Asset User Protection, Transaction Transparency and Market Discipline

The Financial Services Commission announced that the Act on the Protection of Virtual Asset Users (the Act hereinafter) was passed at the National Assemblys plenary session on June 30. The newly established law on virtual assets is aimed at guaranteeing protection of assets held by virtual asset users, regulating unfair transaction activities in the virtual asset market and conferring the market oversight and sanctions authority to the FSC. Virtual asset service providers have been regulated under the revised Act on Reporting and Using Specified Financial Transaction Information since March 2021. However, the current regulatory framework had limits where authorities are not able to actively respond to various types of unfair transaction activities, prevent damages incurred to the users of virtual assets and more effectively supervise and sanction VASPs and assist victims with relief measures. Since the onset of this administration, the government has put forward establishing the infrastructure and regulatory framework on digital assets as a key policy agenda and has been supporting the relevant legislative process at the National Assembly. In August 2022, a private-public joint taskforce on digital assets was launched which established the following principles on the direction of creating a virtual asset regulatory framework(a) working on a gradual and phase-by-phase introduction of regulations, (b) applying same regulations on the same service and same risk and (c) ensuring global regulatory consistency with major economies and international organizations. On April 25 this year, given the urgency of protecting virtual asset users, the legislative subcommittee of the National Policy Committee at the National Assembly decided to go ahead with an enactment of the least necessary regulatory measures. Then, a legislative bill integrating nineteen previously pending bills was prepared and passed at the plenary session of the National Assembly on June 30. First, the Act e
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