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Oct 27, 2022
- FSC Proposess Revision of Supervisory Regulation on Savings Banks to Improve Soundness Management
- The FSC proposed a revision to the regulations on supervision of mutual savings banks in order to improve management of their financial soundness. The key changes will require savings banks to: (a) set aside additional loan loss reserves for borrowers who have debt accounts with multiple lending institutions; (b) calculate their credit extension limits for real estate-related business category, which is regulated for asset quality control, based on de facto borrowers who have a duty to repay principal; and (c) exclude credit extension to nonoperational business branches (e.g., SPC branches) from the calculation of total credit extension within their operating localities. Background Savings banks have grown steadily since a major industry-wide restructuring in 2014, with total assets and net profits increasing year after year. So far, their financial indicators have been stable. However, as savings banks increasingly deal with vulnerable borrowersdebtors with multiple debt accountsthere is a growing need to strengthen savings banks financial soundness management in preparation for future external shocks such as further interest rate hikes or a drop in housing prices. In order to preventively manage mutual savings banks' financial soundness, authorities prepared the revision proposal below for the supervisory regulation of those institutions. Key Revision Details a) Additional loan loss provisions will be required for borrowers with multiple debt accounts. Most savings banks are currently maintaining higher-than-required loan loss provisions in accordance with the asset soundness categories established by supervisory regulation. However, unlike other financial sectors such as mutual finance and credit card companies, there is no rule requiring savings banks to set aside additional loan loss provisions to cover losses from borrowers with multiple debt accounts. As a result, the supervisory regulation will be amended to require savings banks to establish additional loan
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Oct 27, 2022
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Oct 27, 2022
- Regulation on Loan-to-Deposit Ratio to be Temporarily Eased to Facilitate Corporate Financing
- The FSC announced that financial authorities will temporarily ease the regulation on loan-to-deposit ratio, which will enable banks and savings banks to provide sufficient liquidity to businesses. The demand for business loans increased as a result of the recent contraction of the corporate bond market.However, the current regulation on loan-to-deposit ratiohas prevented banks from responding actively to these demands for borrowing. To facilitate active response, loan-to-deposit ratio is chosen as a first step of temporary regulatory easing because it is only domestically regulated and swiftly adjustable. Authorities will continue to monitor financial market situations and consider whether other deregulatory steps on such indexes like LCR (liquidity coverage ratio), NSFR (net stable funding ratio) should be taken. Details of Temporary Regulatory Easing To help banks and savings banks to more effectively respond to corporate loan requests, the loan-to-deposit ratio requirements will be eased from 100 percent for both to 105 percent for banks and 110 percent for savings banks. The eased loan-to-deposit ratio requirements will be applied for upcoming six months first, and authorities will take into account extending the period after reviewing market situation. With this easing of loan-to-deposit ratio requirements, banks and savings banks will have additional capacity to lend more to businesses. Furthermore, competition for deposit-taking is alleviated, and thus reduced borrowing costs will help in part to contain upward pressure on interest rates of corporate loans. Further Plan Financial authorities will issue a no-action letter in October to allow temporary easing of loan-to-deposit ratio rules immediately. Changing the calculation method will also take effect immediately with a no-action letter in October, but authorities will revise the supervisory regulation on banking business afterward to make the change officially. Authorities will maintain close communication
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Oct 26, 2022
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Oct 26, 2022
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Oct 24, 2022
- Financial Authorities Hold Meeting to Respond to Bond and Money Market Situation
- FSC Chairman Kim Joo-hyun presided over a meeting of senior FSC officials on October 23 right after the government-wide emergency meeting on macroeconomic and financial stability took place. At this meeting, Chairman Kim ordered authorities to promptly take follow-up actions to implement the support measures announced at the earlier emergency meeting. After the senior official meeting, FSC Standing Commissioner Kwon Dae-young held another meeting with the Financial Supervisory Service (FSS), financial industry groups, policy financial institutions and commercial financial institutions to check the recent situation of bond and money market and related risk factors in financial institutions. At the meeting, financial authorities explained that they will immediately activate the KRW50 trillion-plus liquidity of supportive measures announced at the government-wide emergency meeting. Authorities emphasized that the government, aiming to ensure market stability, will provide ample support by all means necessary. In addition, as restoration of market mechanisms is the key to overcome the current problematic situation, authorities said, market participants such as financial institutions and institutional investors also should step up their own efforts to facilitate recovery of the role of financial markets as intermediaries and accordingly to ensure a virtuous cycle. Moreover, authorities underscored the need for concerted efforts of both the government and the private sector. Application of all available means at their disposal and close communication between them should be in harmony to ensure market stability as the government alone has limited financial resources. Financial industry groups, in response to authorities request, also showed their commitment to strengthen efforts to stabilize financial markets and actively cooperate with the governments measures. * Please refer to the attached PDF for details.
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Oct 21, 2022
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Oct 20, 2022
- Scope of Data Categories for Financial MyData Service to be Expanded
- The FSC announced a plan to expand available data on financial MyData service from the end of this year. The number of personal data categories will grow significantly from 492 to 720, which can cover most financial sectors including banks, insurers, card companies, financial investment firms and public financial institutions. A demand survey on MyData service providers in March 2022, which was conducted right after the launch of financial MyData service in last January, revealed additional data categories that need to be added. To insert these categories into MyData ecosystem, many data providers like financial industry groups, financial institutions and MyData service providers voluntarily organized MyData taskforce to discuss mutual development and cooperation. Between April and August this year, the taskforce held over 40 meetings and reached an expansion plan. MyData portal (www.mydatacenter.or.kr) will provide information on new service offerings and service improvement of MyData service providers, enabled by this expansion of data categories available. Achievement So Far (Penetration of MyData Service) Since the launch of financial MyData service on January 5 this year, financial MyData service has grown rapidly. The cumulative number of subscribers grew to about 54.8 million (in September 2022), increased about 3.9 times from about 14 million users in January. The volume of API (Application Programming Interface) transfers per day went up from 274 million at the end of January to about 384 million at the end of September. The number of MyData service providers also increased from 33 to 52 for now. (Enhanced Consumer Convenience) Financial MyData service made data ecosystem more consumer-oriented where financial consumers can quickly and conveniently access a variety of their personal data scattered around financial sphere with a single sign-on. As data sharing practice changes from indiscriminate data scraping to formal data transfer under consumer acknowled
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Oct 20, 2022
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Oct 13, 2022
- Household Loans, September 2022
- In September 2022, the outstanding balance of household loansacross all financial sectors fell KRW1.3 trillion (m-o-m). It edged back lower again from the increased one of last month and sustains a stable level overall.Financial authorities will manage to keep the growth rate of household debt stable while making continuous efforts to alleviate financial burdens of low income households and non-speculative homebuyers. (Overall) Household loans across all financial sectors declined KRW1.3 trillion last month. The growth (y-o-y) was 0.6 percent which continued to slow since the second half of 2021. (By Type) Mortgage loans increased at a slower rate than the previous month and other types of loans fell at a faster rate, leading to an overall drop in household loans. - (Mortgage Loans) Mortgage loans rose KRW2.0 trillion in September, growing at a slower rate compared to the previous month (up KRW2.7 trillion), as group lending for new apartment subscription fell from KRW1.2 trillion to KRW0.5 trillion. - (Other Types of Loans) Other types of loans fell KRW3.3 trillion, declining significantly from the previous month (down KRW1.8 trillion), due to a drop in credit loans. (By Sector) Household loans edged back down in both the banking and nonbanking sectors. - (Banking Sector) Banks saw a drop of KRW1.2 trillion in household loans. Mortgage loans from banks grew KRW0.9 trillion,rising at a slower rate than the previous month (up KRW1.6 trillion), as jeonse loans and group lending for new apartment subscription went up KRW0.6 trillion and KRW0.5 trillion, respectively. Other types of loans from banks fell KRW2.1 trillion, declining at a faster rate than the previous month (down KRW1.3 trillion), as credit loans dropped KRW1.8 trillion. - (Nonbanking Sector) In September, nonbanks saw a drop of KRW0.1 trillion in household loans with increases in insurance companies (up KRW0.6 trillion) and savings banks (up KRW0.2 trillion) and declines in mutual finance (down KRW0.5 tri
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Oct 12, 2022
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Oct 07, 2022
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Oct 05, 2022
- New Start Fund Launched on October 4 to Support Rebound of Micro-enterprises and Self-employed
- The FSC announced that New Start Fund, a bespoke debt adjustment program to help pandemic-hit micro-enterprises and self-employed business owners was launched on October 4. At the launching event, 19 financial industry groups and financial institutions signed a memorandum of understanding (MOU) for New Start Fund. From October 4, application for New Start Fund became available at 76 on-site nationwide locations and New Start Fund website. The MOU has been prepared after a series of consultation and communication between New Start Fund, Credit Counseling and Recovery Service (CCRS) and financial industry groups and institutions. It contains details about New Start Fund like eligibility, details of support, method of debt adjustment and its process, debt purchasing price, etc. Each financial industry group participating in the MOU signing event is currently at the final stage of collecting agreements from about 3,730 financial institutions expected to sign up for the partnership. FSC Chairman Kim Joo-hyun attended the New Start Fund launching event and thanked everyone who has contributed to the preparation. While stating that New Start Fund will help support the recovery of micro-enterprises and the self-employed and prevent social, economic and financial anxieties about insolvency risks, Chairman Kim urged authorities to ensure seamless operation of this new debt adjustment program. The pandemic-hit self-employed and micro-enterprises wishing to apply for debt adjustment can apply for New Start Fund by visiting one of the 76 on-site locationsfrom 9:00 am, October 4. Application is also available through an online platform. * Please refer to the attached PDF for details.
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Oct 05, 2022
- Relief Conversion Loan Available for Mortgagors Owning Houses Worth KRW400 Million or Less
- The FSC announced that mortgage holders owning only one house which is worth KRW400 million or less can apply for Relief Conversion Loan from Thursday, October 6 (The application period already started on September 15 for mortgage holders owning house worth KRW300 million or less). This preferential Relief Conversion Loan program which covers KRW25 trillion in total loan amount offers eligible mortgage holders to refinance their adjustable-rate or mixed-rate mortgages to those with long-term maturity, fixed interest rate and monthly principal payments. Application for Relief Conversion Loans will be accepted from October 6 to 17.Exact date will be allocated like the table below according to the last digit of birth year on applicants resident registration number (RRN). Depending on the type of the institution an applicant borrowed from, the institution receiving the application differs. When an original lender is Kookmin, Shinhan, Nonghyup, Woori, Hana Banks or Industrial Bank of Korea, the applicant should submit to the original lender. However, when an original issuing institution is other bank or nonbank financial institution, the application should be submitted to Korea Housing Finance Corporation. Applicants need to keep in mind the following factors before application. a) Check the type of benchmark rateyour mortgage uses and its adjustment periodas well as trends in benchmark rates to understand when your interest rate will be adjusted next and how much your benchmark rate will be increased during the interval. b) Decision to apply for Relief Conversion Loan should be made after comparing the expected interest rate of the forthcoming adjustment datenot your current interest ratewith the interest rate of Relief Conversion Loan. c) If interest rates fall in the future and then a borrower wishes to switch Relief Conversion Loan to another mortgage loan that offers a lower interest rate, a refinancing is possible without burden of an early termination fee. If the
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Sep 30, 2022
- Measures to Soft Land Loan Maturity Extension and Payments Deferment for Self-employed and SMEs
- The government and financial institutions decided to provide loan maturity extension for up to three more years and payments deferment for up to one more year for the borrowers currently using these programs.While providing sufficient time for the self-employed and SMEs to recover their repayment capabilities, authorities will ensure thorough protections for those who are unable to recover on their own with New Start Fund for the self-employed and a debt adjustment program for SMEs. During the extended period, loan forbearance programs will allow businesses to draw up their repayment plans tailored for individual situations in consultation with financial institutions. This will help ease the concern about financial institutions financial soundness and support soft landings for both borrowers and financial institutions. Overview Since April 2020, the financial authorities and financial institutions have made available loan maturity extension and principal or interest payments deferment for SMEs and small merchants experiencing temporary liquidity shortage from COVID-19. As businesses continued to incur damages from COVID-19, the maturity extension and payments deferment program has been extended six-month each for four times over the past two and a half years. Financial institutions have provided forbearance support for KRW362.4 trillion loan through this program till June 2022. As of the end of June 2022, 570,000 borrowers and KRW141 trillion loans are still under this support. Evaluation on Current Situation After COVID-19 business restrictions were completely lifted on April 18, business conditions for the self-employed and SMEs are gradually returning to normal. However, deterioration in economic and financial conditions such as rising interest rates, high price level and falling currency value delays a full recovery. Amid slow business recovery, there is a concern that the self-employed and SMEs may default on their debts if the loan maturity extension and payme
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Sep 29, 2022
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Sep 28, 2022
- 2022 Korea Fintech Week Opens
- The 4th annual global fintech expo, 2022 Korea Fintech Week will be held for three days from September 28 to 30 for both on-site (Lotte Hotel Seoul) and online viewing. Fintech businesses and experts from at home and abroad participate. Welcoming Remarks by FSC Chairman FSC Chairman Kim Joo-hyun delivered welcoming remarks at the opening ceremony. He spoke about the economic, financial and regulatory environment surrounding the fintech ecosystem and the governments policy direction to promote fintech. The following is a summary of Chairman Kims remarks. Koreas fintech industry expanded its size significantly in terms of the number of businesses in operation. However, recent global fintech rankings show Koreas ranking dropped from 18th in 2019 to 26th in 2020. And currently, fintech firms are facing challenges from expanding platform-based big tech companies and financial institutions which accelerate digitalization. Fintech firms also experience difficulties in attracting investments amid tightening monetary policies around the world. Besides, there are continuing concerns about inflexible regulations in the financial sector. In response to rapidly changing conditions surrounding the fintech industry, the government will act in a more agile manner to support fintech businesses in four aspects. First, the government will improve the financial regulatory sandbox program to promote commercialization of fintech services in order to make fintech startups to utilize this program more actively. Second, the government will examine and strengthen the financial support infrastructure to facilitate investment and funding on fintech firms. Third, the government will work to expand regulatory flexibility for artificial intelligence (AI)-based services and the rules on cloud computing use and network separation. Fourth, through a fundamental reexamination of current regulations, the government will actively pursue digital regulatory reforms throughout the whole financial industry
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Sep 28, 2022
- Measures to Strengthen Capacity to Respond to Unfair Trade Practices in Capital Markets
- The FSC proposed new measures to improve the effectiveness of penalties on unfair trade practices in capital markets. The measures include (a) a ban on new transaction and account opening for investment products and (b) disbarment from serving as a board member of listed companies up to 10 years. These measures will help prevent flagrant and repeated unfair trade practices and establish a sound capital market order. Authorities will propose a revision bill of the Financial Investment Services and Capital Markets Act (FSCMA) and propel its passage at the National Assembly. In addition, the FSC will make efforts to pass another FSCMA revision bill to provide calculating method for unfair profits acquired by unlawful trades and to introduce penalty surcharges. Background In capital markets, unfair trade practices increasingly take diverse and complex forms. However, the measures to punish, block and prevent them remain somewhat ineffective. In particular, unfair trades on material nonpublic information by board members of listed companies (who in fact should have a high degree of integrity) happen frequently and recidivism by those who previously committed unfair trades proliferates. The majority of ordinary investors suffer financial losses and trust in our capital markets is damaged. In May 2022, the new administration announced improving the effectiveness of penalties on unfair trade practices as one of 120 national policy tasks to restore fairness and trust in capital markets. Then, the government has prepared detailed plans through policy seminars and expert meetings. Current Situation and Problems (Overview of Unfair Trade Practice Cases) In recent five years (2017-2021), the number of unfair trade practice cases handled by the Securities and Futures Commission (SFC) was 274 in total, which translates into 54.8 cases annually. In terms of violation type, use of material nonpublic information was most prevalent (43.4%), followed by unfair trading (29.6%), market p
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Sep 26, 2022
- KoFIU Unveils H1 2022 Survey Result on Virtual Asset Service Providers
- The Korea Financial Intelligence Unit (KoFIU) conducted a survey on 35 registered virtual asset service providers (VASPs) in order to see the current state of the domestic virtual asset market. Survey Overview (Respondents) 35 VASPs (26 exchange service providers and 9 other businesses) (Survey Method) Collect data from VASPs by paper surveys (Period Covered) January 1, 2022 to June 30, 2022 Key Survey Findings for H1 2022 The domestic market for virtual assets in H1 2022 has been downsized significantly compared to that of H2 2021 in terms of market capitalization, trading volume, etc.This seems to be caused by a slowdown in economic activities following the crisis in Ukraine, interest rate hikes and decreasing liquidity as well as falling level of confidence in virtual assets in the wake of the Terra-Luna crash. Total sales profits gained by VASPs stood at KRW630.1 billion, a drop of 62 percent compared to KRW1.6 trillion in H2 2021. According to the survey, the number of virtual assets traded in domestic market was 1,371. When excluding duplicates on multiple exchanges, the number of virtual assets stood at 638, and among them, the number of stand-alone virtual assets listed and traded on a single exchange was 391 (or 61 percent). The proportion (% of market capitalization) of the global top ten virtual assets handled by the KRW-based exchange service providers increased from 41 percent to 47 percent, while the proportion (% of market capitalization) of stand-alone virtual assets increased from 84 percent to 86 percent for the coin-only exchange service providers. About 36 percent of stand-alone virtual assets (or 139 of them) were small-scale in their size with market capitalization of KRW100 million or less. For these small-scale virtual assets, users need to practice caution as they may be prone to abrupt price volatilityand liquidity shortage. As of the end of June 2022, the number of users eligible to trade in virtual assets stood at 6.9 million. The amount
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Sep 13, 2022
- Ex-ante Disclosure Rule to be Introduced for Insider Transactions
- The FSC announced a plan to introduce an ex-ante disclosure for stock transactions by company insiders (board members or principal shareholders) which have been subject to only the ex-post disclosure rule thus far. Insiders of listed companies who plan to sell or purchase shares issued by his/her own company within a given year will need to disclose the purpose, price and volume of trading as well as expected trading period at least 30 days before the expected trading date. For nondisclosure, disclosure of false information or failure to comply with the trading plan, authorities will prepare effective compliance measures depending on the severity of violation such as a criminal penalty, fine, administrative action, etc. Introducing ex-ante disclosure is expected to enhance information transparency and market predictability regarding insider stock trading, thereby helping to ease market volatility. Since this measure is a closely anticipated policy task of the new administration, the financial authorities will make efforts to promptly prepare and submit a revision proposal of the Capital Markets Act to the National Assembly. Background Large-scale stock offloading by insiders such as board members of listed firms, etc. causing abrupt fall in stock prices has continued to present a source of discontent for investors and a concern for the society.Some ordinary investors suspect that company insiderswho have the ease of access to undisclosed company informationhave been using that information to pocket personal profits while ordinary investors are burdened with losses. Faced with this problem, the FSC has strengthened safeguards for ordinary investors by improving the rule in March this year to restrict stock sales for six months (a lock-up period) from the time of company being listed even for shares that have been acquired by exercising stock option. However, this measure alone cannot regulate sales of stocks by insiders after the lock-up period (six months) and that