Press Releases - Financial Services Commission

Press Releases

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Aug 07, 2015

Notice for Financial Customers upon Designation of Temporary Holiday on August 14

▪ All financial markets will be closed. Most financial institutions will be closed as well.▪ Financial customers with loans due August 14 can repay their loans on August 17 without overdue interest.In commemoration of the 70th anniversary of the Korean independence, August 14 is designated as temporary holiday. All financial markets including securities and bond markets will be closed. Most financial institutions will be closed as well.* Pleaserefer tothe attachedPDF for details.
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Jul 22, 2015

Revision to Regulation on Financial Institutions

The revision to「Regulation on Financial Institutions’ Outsourcing of Data Processing Business IT Facilities」will take effect upon its approval by the Financial Services Commission (FSC) on July 22, 2015. The revision includes shifting of the current ‘ex-ante’ regulations to ‘ex-post’ regulations to reduce financial institutions’ burden related with outsourcing of data processing business.*Please click the attached file for details.
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Jul 22, 2015

FSC Gives Preliminary Approval for Hana Bank-KEB Merger

The FSC held its 14th meeting and gave preliminary approval for the merger of Hana Bank and Korea Exchange Bank (KEB). As members of the executive board and governance structure of the new Hana-KEB bank have not been decided yet, eligibility of executives and appropriateness of governance structure will be reviewed in the final review process upon submission of request for official approval for the merger. * Please click the attached file for details.
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Jul 21, 2015

Statement on Privatization Plan for Woori Bank

The Public Fund Oversight Committee (PFOC), a deliberative body in charge of privatizing Woori Bank, held a meeting today to discuss how to push forward the privatization and decide on the new plan. 1. The PFOC decided to consider a new approach of selling 30% to 40% out of the government’s 48.07% stake to multiple buyers in smaller portions ranging from 4% to 10%, in addition to its previous plan of selling the controlling stake to a single buyer. After searching for potential buyers, we came to a conclusion that it is difficult to find a single buyer for the controlling stake, while there are multiple potential investors interested in a partial stake, who will form a group of major shareholders to control the board of directors. We expect the new option to draw more diverse market interests. The remaining stake, a maximum of 18.07%, will be open for smaller investors. 2. Woori Bank needs to continue to make efforts to further boost its corporate value in order to facilitate its privatization. 3. In the process of tapping potential buyers, we recognized that market participants are still concerned whether the government would continue to intervene in the bank’s management after the bank is privatized. In order to dispel such worries, the government will improve the implementation of the MOU with the bank even before the completion of the sale in order to ensure the bank’s autonomy in management. Upon the sale, the MOU will expire. We reaffirm that the government will never intervene in the bank’s management. 4. Given insufficient investors’ interest in Woori Bank, it is difficult to proceed with the sale process immediately. We will continue to make our efforts to make the market condition mature enough to attract sufficient demand for the bank. 5. The government has a strong commitment in pushing forward the sale of Woori Bank and will continue to make our utmost effort to privatize Woori Bank as early as possible. * Please refer to the attached PDF for
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Jun 09, 2015

Revision to Regulation on Financial Institutions' Outsourcing of Data Processing Business & IT Facilities

The FSC announced a 20-day notice (June 10~July 1) of revision to the Regulation on Financial Institutions’ Outsourcing of Data Processing Business IT Facilities. The revision intends to reduce financial institutions’ burden related with outsourcing of data processing business by shifting regulatory focus from the current ‘ex ante to ‘ex post’ regulations. Outsourcing their data processing, financial institutions are subject to obligations under relevant data protection laws and regulations to protect customers’ personal information. The revised draft will be reported to the Financial Regulatory Council to be held on June 18, reviewed by the Regulatory Reform Committee and finally approved by the FSC to be enforced. BACKGROUNDFinancial institutions outsource their data processing business for financial transaction information to cut cost and enhance efficiency. Korea established the Regulation on Financial Institutions’ Outsourcing of Data Processing Business IT Facilities in June 2013 to allow the outsourcing of such data processing business. Since then, there have been requests from financial institutions including foreign financial firms for further improvement in the relevant regulation in accordance with global standards. The FSC gathered opinions and suggestions from financial firms to come up with the revision to the regulation. KEY CONTENTS1. Streamline regulatory system The current regulation requires the outsourcing of data processing to be reported to the Financial Supervisory Service(FSS), while requiring the outsourcing of IT facilities to be approved by the Financial Services Commission(FSC).  With the revision, the requirement for approval in regard with IT facilities outsourcing will be abolished. Under the revised regulation, financial firms will be required to report the outsourcing of their data processing business to the FSS. 2. ‘Ex post’ reporting of data outsourcing Under the current regulation, financial institutions are r
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Mar 20, 2015

Business Guideline for Financial Market Infrastructures

1. BACKGROUNDAfter the global financial crisis in 2008, countries around the world strengthened financial regulation and supervision in order to prevent systemic risk in financial markets. The G20 countries agreed on stricter supervision on financial market infrastructures, mandatory clearing of over-the-counter(OTC) derivatives through a central counterparty(CCP) and mandatory reporting of transaction information to a trade repository(TR). To avoid regulatory arbitrage among different jurisdiction, the G20 endorsed the Principles for Financial Market Infrastructures(PFMIs)1 as international standards for payment, clearing and settlement systems.In line with such a global move, Korea bolstered supervision on financial market infrastructures and is now in the process of implementing international standards into domestic regulatory framework. We strengthened monitoring and investor protection in derivatives markets. Korea also introduced a CCP for clearing OTC derivatives(April 2013) and mandatory clearing of Korean won IRS through a CCP(June 2014).With the establishment of the ‘Business Guideline for Financial Market Infrastructures,’ the FSC intends to adopt the PFMIs as clear guiding principles in supervision of domestic financial market infrastructures.2. SUMMARY OF「BUSINESS GUIDELINE FOR FINANCIAL MARKET INFRASTRUCTURES」*Attached: Full Text of the Business Guideline for FMIsOVERVIEWThe Business Guideline for Financial Market Infrastructures(hereinafter ‘the Guideline’) is to provide specific standards that financial market infrastructures(hereinafter ‘FMIs’) should comply with in conducting business pursuant to the Financial Investment Business and Capital Markets Act and its subordinate regulations.Reflecting the PFMIs, the Guideline reorganized provisions related with financial market infrastructure, scattered throughout the Financial Investment Business and Capital Markets Act, into a systemic order.FMIS SUBJECT TO THE GUIDELINEThe Guideline sh
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Dec 04, 2014

Bidding Results for Woori Bank Shares

The Public Fund Oversight Committee(PFOC) held its 103rd meeting on December 4 after receiving the bidding results for Woori Bank shares from the Korea Deposit Insurance Corporation(KDIC).(Minority shares) Out of the 23.76% stake on sale, the KDIC auctioned off 5.94% for KRW 453.1 billion, which offered higher price than the KDIC’s estimation. Successful bidders will be granted call options accounting for 50% of the winning bid. The sale process will be completed within next week after signing stock sale contracts.(Controlling shares) The bid ding procedure for the controlling stake, which needs at least two bidders to proceed, will be halted since only one bid had been received.The PFOC will continue to discuss and then decide when and how to resume sale of the remaining 48.06% stake.*Please refer tothe attachedPDF for details.
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Nov 18, 2014

Korea's Reunification & Financial Policy Tasks

1. Historical Implication of Korea’s Reunification2. Current Status of North Korea’s Economy3. Financial Policy Task Upon Economic Integration4. Measures to Support NK Development5. Plan to Build Financial System for Stable Economic Integration6. Plan to Reform Financial System for Macroeconomic Stability7. Conclusion* Please note that this material is to encourage constructive discussion among academia, policy banks and financial institutions about Korea's reunification. This is not the Korean government's official stance at the moment, which needs further discussion in the future.* Please refer to the attached PDF.
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Oct 27, 2014

The Sales Process for Minority Shares in Woori Bank

The sales process for minority shares in Woori Bank has started with a public announcement made on October 27, 2014.The Korea Deposit Insurance Corporation put its 18% stake in Woori Bank for auction.Bidders are allowed to make bids for minority shares of between 0.4% and 10%.As an incentive to draw more tenders, winning bidders will be given call options of 0.5 shares per share. The KDIC will keep possession of approximately 9% of its share to pay out the call options. Investors can exercise their call options anytime within three years after one year since the issuance.With public announcement on the sale on October 27, the bid will be closed on November 28.Successful bidders will be selected and announced within December.*Please refer to the attached PDF for details.
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Jul 15, 2014

Plan to Improve License System for Financial Investment Business

The FSC announced its plan to ease regulations on license system for financial investment business, which includes integrating business units for license, currently overly subdivided, and simplifying license process.KEY DIRECTION1. Improve License System for Financial Investment BusinessIn principle, financial investment businesses will be required to apply for a business license for only when it first enters the sector. The number of business units for regulatory approval will be cut from the current 42 to 13(see the table below). Once a financial institution is granted a regulatory approval for business(①~⑬), the company will be allowed to add new business within the same sector simply through add-on registration, without any additional procedure for approval.How business units for regulatory approval will change* Please refer tothe chartin the attached PDF. Regulations regarding majority shareholders will be also revised. - (Current) Person not allowed to participate in business management due to spinoff is classified as a “specially related person” under the Financial Investment Business and Capital Markets Act(FSCMA ), which unreasonably restricts such person from becoming a major shareholder. - (Revision) If the Fair Trade Commission confirms the person not participating in management due to spinoff, the person will not be classified as a “specially related person”. - (Current) A financial firm issued with sanctions equal to or stronger than institutional warning within the ‘recent three years’ is banned from becoming a largest shareholder of a financial investment company. - (Revision) For institutional warning, the period will be shortened to from the current three years to the recent one year.Other procedural regulations on license or registration will be eased or improved. - (Current) Under the current practice, a financial investment company issued with sanctions equal to or stronger than institutional warning is suspended from applying fo
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Jun 23, 2014

Privatization Plan for Woori Bank

The Public Funds Oversight Committee deliberated and approved on June 23 the privatization plan for Woori Bank.BASIC DIRECTIONWoori Financial Holdings will be merged with Woori Bank. The Korea Deposit Insurance Corporation(KDIC) will then sell its entire 56.97% stake in Woori Bank. The stake will be put up for two-track sales to proceed separately but simultaneously: sale of a controlling 30% stake and sale of the remaining minority shares.DETAILED PLAN1. SALE OF CONTROLLING STAKEOut of KDIC’s 56.97% stake in Woori Bank, the controlling 30% will be s old to a single buyer who seeks management rights of the bank. The shares will be sold according to general MA procedure.2. SALE OF MINORITY SHARESThe remaining 26.97% will be put up for auction for investors seeking investment returns. Bidders are allowed to make b ids for minority shares of between 0.5% and 10%. As an incentive to draw more tenders, winning bidders will be given call options - e.g. 0.5 shares per share – for the stake they won. The sale process will proceed in a swift manner skipping preliminary bidding and price adjustment.SCHEDULEPublic announcement on the sale will be made in September. The bids will be closed at the end of November. Final bidders for the controlling stake and winning bidders for minority shares are expected to be selected by the end of 2014.* Please read the attached file for details.
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Jun 19, 2014

Implementation Rules for the Korea-US Tax Information Exchange Agreement

The FSC approved today the Implementation Rules for the Korea-U.S. Tax Information Exchange Agreement, which will be implemented from July 1, 2014. The purpose of the rules is to provide a clear guideline with Korean financial institutions that come under reporting obligation of the Foreign Account Tax Compliance Act(FATCA) in order to relieve their compliance burden.BACKGROUND: WHAT IS FATCAThe Foreign Account Tax Compliance Act(FATCA) was enacted in 2010 to target tax non-compliance by U.S. taxpayers with foreign accounts. FATCA requires foreign financial institutions(FFIs) to report to the Internal Revenue Service(IRS) information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. Non-compliant FFIs face a 30% withholding tax on certain U.S.-source payments made to them.Governments around the world are signing intergovernmental agreements with the U.S. government to ease burden of their domestic financial institutions under FA TCA reporting obligation. Korea singed a bilateral agreement with the U.S. in March 2014 on automatic exchange of tax information. Under the bilateral tax deal, financial institutions are required to report their own country’s tax authorities – the National Tax Service(NTS) for Korean financial firms and the IRS for U.S. firms – information about their clients’ financial accounts. The NTS and the IRS will exchange such information in every September starting from 2015.KEY CONTENTS OF THE IMPLEMENTATION RULES1. Financial institutions and financial accounts subject to FATCA reporting obligation- (FINANCIAL INSTITUTIONS)* depository institutions (e.g. banks, savings banks), custodial institutions (e.g. securities firms), investment entities (e.g. private equity funds), insurers * Reporting requirement is relieved for certain small financial institutions and local financial firms whose customer base is primarily local.- (FINANCIAL ACCOUNTS) depository ac
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Mar 11, 2014

Comprehensive Measures to Protect Personal Data in the Financial Sector

OVERVIEWThe FSC and relevant ministries jointly announced a package of measures to prevent a recurrence of personal data leaks in the financial sector, as part of the government’s follow-up measures to ensure market discipline under its three-year plan for Korea’s economic innovation.The measures announced today were drawn up based on the following basic principles, further developing a series of measures previously announced since the data leakage from the three credit card companies were revealed last January. 1. Financial firms will be asked a greater responsibility in handling their customers’ personal data at each stage that they collect, retain, use and discard customers’ information. 2. Financial consumers’ right to their personal information will be ensured so that they can decide for what, when and how their own personal data are being used by financial firms. 3. Financial firms will be held more accountable for personal data protection and strictly sanctioned in the event of personal data security breach. 4. Cyber security measures will be strengthened across the financial sector in response to cyber crimes such as hacking. 5. The government will make sure financial consumers’ personal data previously provided or illegally-circulated not to be misused by financial scammers.1. STRENGTHEN PERSONAL DATA PROTECTION AT EACH STAGE THAT FINANCIAL FIRMS COLLECT, RETAIN USE A ND DISCARD CUSTOMERS’DATAFinancial firms will be asked a greater responsibility in handling their customers’ personal data at each stage that they collect, retain, use and discard such information .‘COLLECT’ STAGEFinancial firms will be allowed to collect necessary information at a minim um level from their customers. Currently, financial firms are collecting 30 to 50 items of information from their customers. The list of collected information will be shorted up to 6 items necessarily required for financial transactions.3Additional information should be collected only with
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Feb 04, 2014

Follow-up Measures on Telemarketing Ban

BACKGROUNDThe FSC temporarily banned (Jan.24) financial firms from selling their products by phone, SMS or e-mail until the end of March in order to protect financial consumers from any possible financial scam using illegally-circulated personal data.Since then financial firms are conducting self-inspections due February 14 on their data security to submit a report to the FSS. Based on the result, the FSS plans to inspect financial firms deemed vulnerable to da ta breach in March.FOLLOW-UP MEASURESThe FSC will thoroughly examine whether personal data held by financial firms are all obtained legitimately in order to ease financial consumers’ concern about possible financial fraud, while lifting the temporary ban on telemarketing as soon as the legitimacy is confirmed in a bid to ensure job security of telemarketers.□ TelemarketingInsurance companies are required to submit their CEOs’ confirmation to the FSS by February 7 that ensures personal data used for telemarketing is obtained legitimately from customers. After the FSS review the report, insurers will be allowed to resume telemarketing as early as late next week. If the confirmation submitted by insurers is found to be opposed to facts, the insurers will be faced with strict sanctions.General agencies and card companies will be also allowed to resume telemarketing, presumably at the end of February, as soon as the FSS confirms that person al data used for such marketing activities are legitimately obtained.□ Sales activities by SMS or e-mailFinancial firms will be allowed to sell their products by SMS or e-mail as soon as the FSS confirms the legitimacy of data collection and use and introduce relevant guidelines around the end of March. The FSS will offer financial firms guidelines on strict internal control and compliance procedure about customer data protection.* Please refer to the attached PDF for details.
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Jan 29, 2014

Guideline for Personal Data Protection

10 CHECKLISTS FOR PERSONAL DATA PROTECTION1. Be aware that your credit cards are safe to use. All files and USB drives containing personal information from the three credit card companies were confiscated by the prosecutors and there is no possibility that your credit cards could be used fraudulently.2. Sign up for “credit card payment notification SMS service” provided by credit card companies free of charge to receive SMS notice on every payment settled using your credit card.3. Visit the website of respective credit card companies or make a phone call to call centers to check whether your credit card has been misused.4. No need for extra charge when cancelling or re-issuing credit cards.5. Report to the respective credit card company for any loss via website, call centers, or by visiting nearby office. Cred it card companies will cover all financial loss in case any fraudulent transaction incurs.6. Be reminded that credit card companies, in any case, do not send SMS related to personal data breach.7. Do not click any links attached to emails or SMS from anonymous sources and erase them immediately.8. Do not answer any questions but hang up immediately if you receive phone calls asking for credential information such as credit card PIN number or CVC code from someone claiming to be as someone from public institutions, financial authorities, or financial companies.9. Report immediately to the police(☎112), Financial Supervisory Service(☎1332), or respective financial companies if you suspect any financial fraud.10. Damage Report Center is open 24 hours to provide any assistance related to personal data breach.* Pleaserefer tothe attachedPDF for details.
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Jan 24, 2014

Measures to Protect Personal Data from Illegal Circulation and Use

The FSC and relevant ministries held an emergency meeting on January 24 to come up with measures to protect personal data from illegal circulation and use in a joint effort to relieve financial consumers’ concern that illegally-circulated personal data could be used for fraudulent transaction.BACKGROUNDProsecutors announced (Jan.8 /Jan.19/Jan.21) that about 100 million credit card account details were leaked from Kookmin Card, Nonghyup Card and Lotte Card by a contractor with the personal credit rating company Korea Credit Bureau (KCB) over the course of a year beginning in December 2012. The contractor and the alleged buyers of the information were arrested; and the original files and USB of the stolen data were confiscated with no sign of further circulation.The three credit companies said that there had been no financial damage reported so far related to the breach. The FSS found that sensitive information such as credit card passwords or CVC codes was not included in the stolen data. There is no concern that the leaked information would be used for fraudulent transactions.The measures announced today are to take comprehensive and prompt actions against any possibility of financial fraud using illegally-circulated personal information in order to relieve people’s anxiety about their personal data safety.1. PROTECT PERSONAL DATA FROM ILLEGAL CIRCULATION AND USEProsecutors, the police, and the FSS will immediately launch a joint crackdown indefinitely on illegal circulation and use of personal information. Particularly, unregistered money lenders will be subject to intense scrutiny. For those who illegally circulated and used personal data, prosecutors will demand the maximum sentence possible under the current law.The FSS will conduct inspections on all financial firms to check how they manage customers’ personal data. Monitoring will be strengthened to detect financial fraud using illegally-circulated personal data.Phone numbers suspected to be compromised
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Jan 22, 2014

Measures to Prevent a Recurrence of Personal Data Breach

The FSC and relevant ministries1announced a set of preventive measures to protect financial consumers from personal data breach. The measures are focused on alleviating people’s concerns and inconvenience caused by the recent data leaks; punishing those responsible for the incident; and preventing a recurrence of data theft.BACKGROUNDProsecutors announced (Jan.8 /Jan.19/Jan.21) that about 100 million credit card account details were leaked from Kookmin Card, Nonghyup Card and Lotte Card2 by a contractor with the personal credit rating company Korea Credit Bureau (KCB) over the course of a year beginning in December 2012. The contractor and the alleged buyers of the information were arrested; and the original files and USB of the stolen data were confiscated with no sign of further circulation.The FSS received the data from prosecutors (Jan.10) and found that about 85 million accounts were compromised in total, excluding the number of cards held by the deceased, companies or merchants, although overlaps in multiple cardholders were included.The stolen data includes basic personal data such as names, resident registration numbers, addresses, mobile phone numbers and company names, as well as financial information such as credit card numbers, account numbers, expiry dates and annual income. However, no passwords or CVC codes3 had been stolen.MEASURES TO EASE CONCERNS AND INCONVENIENCE FROM THE INCIDENTThe three credit companies said that there had been no financial damage reported so far related to the breach. The FSS found that sensitive information such as credit card passwords or CVC codes was not included in the stolen data. Credit card companies will cover any financial damage incurred by fraudulent transactions.They will provide a service for free that sends text message notifications for each card transaction to mobile phones. KCB will provide a privacy protection service for one year to anyone who asks for it.Regulators will consider additional identity valid
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Jan 20, 2014

TF Formed to Respond to Personal Information Leaks

The FSC formed a task force (T/F) to respond to the recent leakage of personal information on credit card holders and held its first meeting on January 17 to discuss how to prevent consequences of the incident from spreading and seek for fundamental measures to prevent a repeat of such an incident.BACKGROUNDProsecutors announced on January 8 that personal information of credit card holders were leaked by an employee of an outsourcing company of three credit card companies.The stolen data does not include credit cards’ pass word or CVC code; therefore, it is very unlikely that the leaked information might be misused for financial frau d. Prosecutors also judged that there was no further leakage of the stolen data as they arrested those who had stolen the information and first distributed. There has been no case yet reported as direct damage of the incident.MAJOR CONTENTS OF DISCUSSION1. Measures to prevent further leaks and remedies for those affectedThe card companies will identify details as soon as possible about how and when personal information was leaked and will inform affected customers via SMS, phone, e-mail, and respective financial company’s website.To prevent further damages, the three credit card companies will issue new credit cards to the victims upon request, provide free credit card payment notification SMS service(temporary service), and ban other financial companies subordinated to their mother group from using customers’ private information when promoting their products.Moreover, the responsible credit card firms will operate 24-hour call center, damage control team, and hot line with the FS S to immediately respond to further damages. Respective credit card companies will provide financial reimbursements to the victims of further damage.The FSS is verifying the details of the accident based on information received from the prosecutors. Damages from the data leak will be responded and normalized in a swift manner. The FSS will respond to the
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Sep 16, 2013

Launch of Capital Market Investigation Unit

The FSC officially launched a ‘Capital Market Investigation Unit’ on September 17, 2013 in a bid to address unfair financial transaction practices as announced in the ‘Comprehensive Measures to Eradicate Unfair Transaction’ dated April 18, 2013.The Capital Market Investigation Unit is an organization dedicated to monitoring and investigating unfair trade practices including stock price manipulation. The investigation unit is established under direct control of the FSC Secretary General and staffed with 18 experts from the FSC, the Ministry of Justice, the Financial Supervisory Service(FSS) and the Korea Exchange(KRX).The unit will be notified of all information related to unfair transactions from capital market oversight authorities including the KRX. The reported cases will be classified into urgent and non-urgent categories according to the necessity of forced investigation and potential social impact which will then be assigned to respective authorities. The Capital Market Investigation Unit will serve as a control tower directing and monitoring all procedures throughout the investigation from recognition of case to prosecution phases.The Capital Market Investigation Unit will be tasked with investigating and monitoring unfair trade practices such as stock price manipulation while drafting policies on unfair transactions will remain as the FSC Capital Markets Bureau’s function.*Please read the attached file for details.
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Jul 07, 2013

Insurance Coverage by Local Insurers for Asiana Airline Accident

The Boeing 777 owned by Asiana Airlines that crashed in San Francisco is under aviation insurance worth a total of USD 2.38 billion.The insurance is jointly covered by nine local insurers including LIG Insurance. The local insurers cover only 0.55% of insurance coverage, and the remaining is reinsured by Korean Re (3.45%) and foreign reinsurers (96%).Given that local insurers including Korean Re only cover a 2.5% of the insurance coverage, estimated costs of the airline accident amount to around KRW 5 billion. Insurers Share of underwriting (%) Share of insurance coverage(%) LIG (main insurer) 34.0 0.04 Samsung 14.0 0.3 Hyundai 11.0 0.1 Dongbu 11.0 0.01 Lotte 11.0 0.03 Meritz 7.0 0.03 Hanhwa 7.0 0.02 Heugngkuk 3.0 0.01 NH 2.0 0.01 Korean Re (reinsurer) - 2.0 Total 100.0 2.55 The FSC will closely work with the General Insurance Association of Korea and local insurers to ensure prompt payouts of compensations for victims’ families and injured passengers.* Please read the attached file for details.
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