Press Releases - Financial Services Commission

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Dec 30, 2009

Impact of Kumho Asiana Group’s Restructuring and Future Actions

SummaryKumho Asiana Group and its main creditor Korea Development Bank (KDB) announced a set of measures Wednesday (December 30, 2009) to restructure the business group’s major subsidiaries. The following is the summary of the measures agreed and settled between the Kumho Asiana Group and its creditors.- Kumho Industrial and Kumho Tires will be placed under creditor-led joint management based on the Corporate Restructuring Promotion Act- Kumho Petrochemical and Asiana Airlines will make rigorous self-rescue efforts to normalize their business- As much as 50% plus one share of Daewoo Engineering and Construction will be sold to KDB-led private equity fund- Kumho Life Insurance will be sold to a private equity fund which will be jointly established by KDB and Consus Asset ManagementThe restructuring of Kumho Asiana Group’s subsidiaries will be made through rigorous self-rescue efforts with an aim for a swift turnaround of management, which include a sale of subsidiaries and, under the responsibility of major shareholders, the provision of stock and assets for collateral to creditors.Impact of the restructuringThe direct impact of the restructuring of Kumho Asiana’s two subsidiaries, Kumho Industrial and Kumho Tires is expected to be not great on the soundness of financial companies and markets.The amount of credit extended by financial companies to Kumho Asiana Group totals KRW15.7 trillion involving KRW10.1 trillion in loans, KRW1.2 trillion in corporate bonds, CP and other securities, and KRW4.4 trillion in payment guarantees and others. Put back options of KRW2.6 trillion to be exercised by financial companies and the PF guaranteesof KRW2.7 trillion are not included in this total credit. The total lending that financial companies have directly extended to the two Kumho Asiana subsidiaries under restructuring is KRW3.0 trillion including KRW2.3 trillion by banks. When the total of put back options and PF guarantees are included, the total credit amounts to KRW
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Dec 09, 2009

AMCHAM Luncheon Speech

Ⅰ. Introductory RemarksThank you, Mr. Chairman, for the warm welcome.Members of the American Chamber of Commerce, distinguished guests, and ladies and gentlemen!I am delighted to speak to you today, and I thank Chairman David Ruch and President Amy Jackson for arranging this very special gathering.I am also pleased to meet members of the U.S. business community here in Korea who joined us today.Most of all, as a representative of the Korean government, I thank AMCHAM for its commitment and dedication to advancing economic ties between the U.S. and Korea.I express my confidence that AMCHAM will continue to serve as a vital link that unites us and enhances our partnership.Ladies and gentlemen!I think it's fair to say that this year has truly been a wild ride.Now, the end of 2009 is almost upon us, and a new year is just around the corner.Today, I will use this occasion to look back at the major economic and financial policies put in place this year, and explore the tasks ahead of us.Let me first quickly review some of the recent economic and financial market trends.Ⅱ . Recent Economic and Financial Market TrendsThe global economy fell into a severe recession in 2009 as a result of a financial crisis triggered by the collapse of Lehman Brothers.But this was also a year of renewed optimism as the global economy hit the bottom and started to move into a recovery phase.Fortunately as well, the Korean economy bounced back quite rapidly in the first half of 2009.And this momentum continued into the second half, as the economy grew 3.2% over the previous period in the third quarter.In fact, the OECD recently declared Korea to be the fastest recovering economy among its members and revised upward its growth outlook for Korea.Korea's financial markets also rapidly returned to normal from the first half on the back of more upbeat growth prospect and global financial market stability.Key financial market indicators, including stock prices and CDS spreads, have also returned
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Dec 03, 2009

UBS Korea CEO/CFO Forum 2009 Luncheon Speech

Ⅰ. Introductory RemarksGood afternoon, ladies and gentlemen!Let me first thank Mr. Jae-hong Lee and Mr. Young Chang of UBS Korea for having me here today.It is also a great pleasure to see so many distinguished business leaders and investors together in one place.We are now coming to the end of 2009, and winter is almost upon us.It has been a year of both despair and hope.But, fortunately, this time around, we are not going to go through the bitter cold we had to bear at the height of the financial crisis last winter.The global economy has been gradually emerging from the panic of a year ago and there is hope ahead.Yet, new concerns, such as fears of another asset bubble and major economies' swelling fiscal deficits, are clouding the outlook for the world economy.In this context, I shall speak today about how the crisis has affected Korea and what the future tasks are for the Korean government.Ⅱ . Lessons from the Global Financial CrisisNow, many wonder what has been the secret behind Korea's vigorous recovery from the crisis.I would say that one unique contributing factor is our experience with a financial crisis a decade ago.This put Korea’s corporate and financial sectors in strong shape and enhanced the government's ability to manage the crisis.And yet, the latest crisis demonstrated that our past experience did not entirely work in our favor.Let me explain.The origin of the 1997 crisis can be traced to internal distortions and distresses built up during decades of rapid economic growth. In contrast, the latest crisis originated from outside Korea.Unlike the major economies that suffered from massive financial implosions, the Korean economy was on a firm footing with healthy corporate and financial sectors.Despite this, the impact of the crisis on Korea was disproportionately large because of the stigma from the 1997 crisis.Some overseas media and investors oddly took the view that a second financial crisis could occur in Korea.This sparked negative percep
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Nov 24, 2009

KDIC sells its stake in Woori Finance Holdings

On 24 November, 2009, the Korea Deposit Insurance Corporation ("KDIC") sold 56,420,000 shares (approximately 7.0% of the total shares outstanding) of Woori Finance Holdings ("Woori") in an after-market block trade sale prior to commencement of trading. The shares were sold to domestic and foreign institutional investors at a price of KRW15,350 per share, resulting in the recovery of KRW866 billion in public funds.Through this transaction, the KDIC has reduced its stake in Woori from 73% to 66%. To date, the KDIC has recovered KRW4.0 trillion of the total of KRW12.8 trillion in public funds it injected into Woori. The KDIC has actively sought to achieve an expedient privatization of Woori through minority stake sell-downs, but has faced difficulties in selling the stake as a result of a sharp decline of share prices amidst the ongoing global financial crisis.However, the recent sustained recovery in Woori's share price and other key factors has helped create a conducive market environment in which the sale could be contemplated. Given this, the KDIC sought and received approval from the Public Fund Oversight Committee for this block trade sale and was able to achieve a highly successful sale of a 7% stake to domestic and international investors.Through this transaction, the KDIC successfully achieved a timely recovery of public funds, underscored the government's strong commitment to the expedient privatization of Woori, and expects to provide future share liquidity in order to enhance the value of the residual stake and optimize future recovery of public funds.* Please refer to the attached PDF for details.
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Nov 11, 2009

IGE/IMF International Conference Luncheon Speech

Ⅰ. Introductory RemarksGood afternoon, ladies and gentlemen!Let me first thank Chairman Kim Pyung-Joo and President Nam Chong-Hyun from the Institute for Global Economics (IGE), as well as Mr. José Viñals from the IMF, for inviting me to this occasion.Further, I wish to welcome all of you from Korea and abroad who have given your valuable time to attend this conference.I’m happy to say that there now appears to be some light at the end of the long and dark tunnel of this crisis.I would like to express my gratitude to all of you in the financial sector and to the Korean people.It has been your efforts that have allowed Korea to recover so quickly.Now it is time to refocus the international community’s cooperation and commitment to future-minded financial reforms.I am confident that today’s conference on the “G20 Initiatives” will be a very meaningful occasion for this.Ⅱ. Lessons Learned from the CrisisLadies and gentlemen!Before the crisis, financial markets were plagued by excessive risk-taking under the assumption that the ‘market is always right’.We lost sight of fundamental principles such as the trade-off between risk and return.And our appetite for leverage seemed to have no limits.Decades of relentless financial innovation alongside stable economic growth provided legitimacy for such an approach.But this crisis is demonstrating yet again that the financial industry must be developed under an appropriate regulatory framework.We are now all well aware that, unlike other industries, the financial sector contains systemic externalities.Simply put, the problems of a single financial firm can bring down the entire market.And this systemic risk has become even more potent due to the complex and interconnected global financial system we have today.Unfortunately, regulators were not sufficiently ready for this when the latest crisis broke out.Their focus on firm-specific micro prudential regulation failed to halt the spread of risk throughout the ma
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Nov 06, 2009

2009 Seoul International Finance Conference Congratulatory Speech

Ⅰ. GreetingsGood morning, ladies and gentlemen!Let me first thank Mayor Oh Se-hoon for inviting me to this prestigious event.I am pleased to meet the honorable ambassadors and so many prominent figures from the financial area.In particular, I would like to welcome Mr. Dominic Barton, the global managing director of McKinsey Company, and all of the distinguished guests from abroad.Seoul is the core city behind Korea’s economic growth.And it is now striving to emerge as a financial hub as well, with Yeouido as its center.I hope this conference will serve as a meaningful platform for discussing these ambitions.Ⅱ. The Direction of Financial Hub DevelopmentThe global community has put its all into overcoming the worst financial crisis since the Great Depression.These efforts have paid off, and the global economy seems back on track.The Korean economy has recovered especially fast, and this has even been termed the “Astonishing Rebound.”Now, at this juncture, we are pursuing policies designed to shape the post-crisis Korean financial industry.As part of this, the government is exploring new strategies for building a financial hub.In fact, existing hub countries like the UK and Singapore already have post-crisis strategies in place.They are responding to the new landscape and are fast enhancing the competitiveness of their financial industries.Korea is a relative newcomer to this race.In order to compete, we will have to concentrate on what we do well and succeed as a Korea-specific hub.With this in mind, the government intends to speed up efforts to boost the competitiveness of financial firms.We will further improve financial infrastructure and ensure that a high quality business environment is in place.In addition, we will devote considerable resources to cultivating a large pool of financial experts.And you can be assured that particular focus will be put on Seoul so that it can firmly establish itself as a global financial hub.This will, however, take close
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Oct 28, 2009

EUCCK Annual Seminar Luncheon Keynote Speech

Ⅰ. Introductory RemarksGood afternoon, ladies and gentlemen!Let me begin by expressing my appreciation to the European Union Chamber of Commerce in Korea (EUCCK) for inviting me to speak today.I am also pleased to meet the honorable ambassadors, and corporate and financial leaders from across the EU countries.And, as a government official myself, I give particular thanks to the EUCCK for doing so much to build close ties between Korea and the EU.The EU is a key trade and investment partner, and our economic cooperation is greatly valued.As you know, Korea and the EU initialed a draft deal on an FTA on October 15th.This marked yet another turning point in the furthering of economic ties between Korea and the EU.And with mutual trust and understanding, I believe there is no doubt that our win-win relationship will only develop more.Now, in line with today's topic, let me briefly give my thoughts on "Korea's Economy and FSC Policy Directions".I hope it will help lend some insights on how you view the Korean economy.Ⅱ. Economic Trends and OutlookSince the global financial crisis began last year, the Korean government has responded swiftly to the crisis with aggressive and far-reaching measures.These measures were, namely, liquidity injections, interest rate cuts, expansionary fiscal policy, and corporate restructuring.And I'm proud to say that financial market anxieties and economic contraction were successfully brought under control.As a result, and due to improving global economic conditions, Korea has led the way out of the crisis by recovering the fastest among all OECD nations.The real economy surged back in the first half this year, and this tide of recovery has stayed robust in the second half.Also welcome news is that equity and other major financial indices have bounced back to pre-crisis levels.Investor sentiment has naturally gone up as well.Not too long ago, foreign investors had major concerns about the Korean economy.They even raised the possibility of
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Oct 16, 2009

Legislative Notice of Amendments to the Enforcement Decree of the Financial Investment Services and Capital Markets Act

OutlineIn the interest of invigorating the MAmarket and corporate restructuring, amendments to the Enforcement Decree of the Financial Investment Services and Capital Markets Act have been devised and are announced herein. Opinions on this matter will be received for the next 20 days after this legislation notice.Key Contents of AmendmentsIntroduction of Special Purpose Acquisition Company (SPAC)A SPAC will be exempt from collective investment regulation when it is equipped with a separate investor protection and public offering deposit condition as stipulated in the Enforcement Decree. The system is also aimed to clarify any legal uncertainties concerning the establishment of a SPAC under the general form of incorporation and pave a realistic system of management and supervision over investor protection.An akin SPAC, not meeting the requirement stipulated above, will not be allowed to process public fund raising and IPO, and will be also exposed to the disposal and supervision against any illegal action through the restrictions of the collective investment regulation.Alleviated Regulation on Private Equity Funds (PEF)A PEF will be allowed to invest into a foreign firm (SPC) that invests over 50% of its assets to companies undergoing restructuring. But the foreign firm must convert its invested shares to target investment company shares in Korea within 6 month in order for effective supervision. This policy change will temporally be effective until the end of 2010.PEFs will also be allowed to invest directly to Social Overhead Capital (SOC). The maximum loan limit of 200% of its asset for a PEF that uses over 50% of its assets to invest in companies undergoing restructuring will be lifted to 300%.Facility FundsEnumerate property, plant and equipments to allow PEFs to purchase them even without the intention of taking over the management.Private FundsPrivate funds that invest in companies undergoing restructuring will be allowed to undertake debt up to 300% of equity
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Oct 14, 2009

Korea Gains Full Membership into the FATF

Korea has been admitted as a full member into the Financial Action Task Force (FATF) during the FATF Plenary held in Paris from October 14 to 16, 2009.Since the establishment of the Korea Financial Intelligence Unit and the introduction of Anti-Money Laundering (AML) system in 2001, the Korean government has been working to obtain full membership into the international organization.A wide range of efforts to join the FATF by Korea, which gained an observer status in August 2006, has come to fruition when this October FATF Plenary decided to admit the nation as a full member.The FATF, a leading international organization for anti-money laundering and counter-financing of terrorism (AML/CFT), was established in 1989 as an independent agency. It sets the global AML/CFT standards and works to ensure countries around the world comply with the standards.The FATF has established the global AML/CFT network consisting of 183 countries through 8 FATF-Style Regional Bodies. The network enables the organization to supervise compliance with the international standards by countries across the globe.Korea’s accession into the FATF will allow Korea to participate more actively in the process of setting or revising the global AML/CFT standards and in international AML/CFT cooperation. It is also expected to help improve integrity and confidence in the nation’s financial market, having positive impacts on overseas business operation by local financial institutions.Korean financial institutions will find it easier to have overseas business operations. They were originally required to submit additional documents for overseas businesses to the relevant authorities of the host countries simply because Korea was not a member of the FATF.Considering the recent G20 Summit called for efforts to enhance transparency in the financial markets and a stronger role by the FATF in addressing the risk of money laundering and terrorist financing, Korea will find itself well-positioned to increase
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Sep 17, 2009

FSB Plenary Meeting Report

The FSC Chairman Chin Dong-Soo attended the 2nd FSB Plenary Meeting in Paris on September 15. The meeting deliberated and finalized on most subjects that will be on the report, “Improving Financial Regulation” scheduled to be submitted to the Pittsburg G20 Summit on September 24-25.The FSC Chairman Chin has contributed in the discussions taken place at the Plenary, the Steering Committee and the Standing Committee through his presentations on the following three main topics: 1. An in-depth discussion took place at the Plenary Meeting especially on the issue of how to stabilize the foreign currency liquidity in emerging countries. This particular subject has been adopted as an official agenda of the meeting as we proposed based upon our own experience in the current crisis. We successfully brought to attention one of the most serious stability issues faced by emerging economies.2. Korea agreed on the basic concept and direction of the FSB’s regulatory reform of the capital framework and that the government and the banking industry are preparing for the strengthening of regulation.3. We also emphasized that not only home but host countries should play more significant roles in within the supervisory colleges, a system of collaborated supervision of systemically important financial institutions.Furthermore, the Standing Committee for Vulnerability Assessment, one of three Standing Committees within the FSB, has reported on four main areas of risk that include: the market impact of rapidly rising government debt, risks related to the timing of exit strategies from current policies, and the challenges in maintaining an appropriate balance and pace of regulatory reform. Authorities in emerging economies are assessing policy challenges related to currency mismatches on sectoral balance sheets and instability in portfolio flows.* Please refer to the attached PDF for details.
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Sep 04, 2009

Progress on Corporate Restructuring

OverviewA preemptive corporate restructuring initiative has been carried out thus far in the interests of financial market stability and recovery from the economic crisis.Although partial signs of an economic recovery have recently been apparent, staying committed to a sustained restructuring effort remains paramount to strengthening Korea’s economic competitiveness going forward.Recognizing that an unwavering commitment to corporate restructuring is necessary, the government reviewed the progress during the President-led economic policy meeting earlier today and determined the future direction of corporate restructuring.Progress in Corporate RestructuringRestructuring of ConglomeratesA full-fledged corporate restructuring has been underway, which included contractual agreements with the nine conglomerates whose liquidity positions had earlier raised concerns. For the groups that signed contractual agreements, intensive self-rescue plans, such as sales of subsidiaries, asset dispositions, and capital expansions, are being actively pursued.Through the main creditor banks, the progress of the conglomerates’ self-rescue plans is being interminably reviewed, and by encouraging their prompt execution proactive restructuring is being given added impetus.Industry-Specific RestructuringTo lay to rest market uncertainties surrounding the possible distress in construction, shipbuilding, and shipping industries, 46 of the 277 companies that were rated C and D were selected for restructuring.Most of the creditors and the respective workout companies have entered into MOUs and are moving quickly through restructuring, such as debt rescheduling and self-rescue plans. As a result, six of the companies have since graduated from workout. Among the 14 D-rated companies, seven companies were called to repay their loans, three companies were put to court receivership, and four were brought subject to the process of liquidation and dissolution.Restructuring of Large Individual Compa
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Aug 19, 2009

FSC English Blog

The Financial Services Commission is officially launching its English blog http://fsckorea.wordpress.com today.Its purpose is to raise public awareness of the changes and progresses in multiple areas of Korea’s financial policies and to promote interactive policy communication with the public as well as with foreign investors and others who are interested in Korea’s financial policies.It aims to explain hard-to-understand financial policies in a simple and easy-to-understand format which the public without much financial knowledge can still manage to comprehend what the policies are about as well as the background reasons for them.The contents of the blog will be on key financial and economic issues, recent press releases from the FSC and other relevant government bodies, and press coverage on Korea’s economy and its financial markets. Currently updated contents are issues relating to the Financial Holdings Company Act, FX margin trading, the Fast Track Program, etc.Links to the blog can be found on the websites of multiple government agencies: Financial Supervisory Services Korea Deposit Insurance CorporationKorea Asset Management Corporation KoscomKibo Technology Fund Korea Credit Guarantee Fund Korea Development Bank Industrial Bank of Korea http://english.fss.or.kr https://www.kdic.or.kr/english http://kamco.or.kr/eng.html http://english.koscom.co.kr http://eng.kibo.or.kr http://eng.kodit.co.kr http://www.kdb.co.kr http://english.ibk.co.kr * Please refer to the attached PDF for details.
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Jul 28, 2009

Privatization of Korea Development Bank

After four months of discussions, the Committee for the Establishment of Korea Public Banking Corporation (KPBC) formed by members from the FSC, MOSF, MKE, and professionals from the private sector has concluded on the following specific spin-off plan for KDB.A focus has been given to dividing the assets fairly and allocating them in a reasonable manner so that KDB can be privatized smoothly and KPBC can conduct public lending effectively.KDB is forecast to have assets of KRW 172.2 trillion, liabilities of KRW 155.0 trillion, shareholders’ equity of KRW 17.1 trillion and a BIS ratio of 13.1% as of end-August.Detailed Spin-off PlanA. Establishment of KDB Holding Company (KDBHC)KDBHC will be established with KRW 1.5 trillion of assets currently held by KDB; Daewoo Securities (KRW 973.4 billion), KDB Capital (KRW 433.5 billion), KDB Asset Mgmt (KRW 41.6 billion), and Infra Asset Mgmt (KRW 11.7 billion).Its liabilities and shareholders’ equity will be KRW 0.35 trillion and KRW 1.15 trillion respectively.B. Establishment of Korea Public Banking Corp (KPBC)KPBC will be established with KRW 28 trillion in assets, KRW 3 trillion in shareholders’ equity and KRW 25 trillion in liabilities.The shares of government-owned companies (worth KRW 15.1 trillion) will be transferred to KPBC as required by law. By law, the government is required to invest 100% or at least more than 50% in public entities such as Korea Electric Power Corporation, Seoul Metropolitan Rapid Transit Corporation and Korea Water Resources Corporation.The shares of companies undergoing restructuring, namely Hyundai Engineering Construction, Hynix, SK Networks, Korea Aerospace Industries and Daewoo International, will also be transferred to KPBC.Assets injected into the Bank Recapitalization Fund, cash assets of KRW 3 trillion and the KDB Capital building will be transferred to the KPBC.Industrial Finance Bonds (IFB), which account for most of KPBC’s liabilities of KRW 25 trillion, will be transferred o
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Jul 22, 2009

Amendments to the Financial Holding Companies Act

Relating to Separation between Industrial and Financial CapitalThe National Assembly has approved the amendments to the Financial Holding Companies Act to be enacted on October 10, 2009, resulting in the relaxation of a "non-financial business operator" (NFBO) from taking ownership of a bank holding company.Currently, an NFBO is not allowed to own more than 4% of the voting shares of a bank holding company. When the amendments become effective, they will be allowed to own up to 9% of the shares. This is possible under the precondition that an advance-screening procedure and a stringent post-supervision be in place to prevent industrial capital from manipulating the financial system.When an NFBO wants to own more than 4% of the voting shares of a bank holding company, become the largest shareholder or participate in management, it must do so with a preapproval of the FSC. And a more stringent post-supervision will be in place to restrict any illegal transactions between the bank and the largest shareholder.Also, when an NFBO invests into a private equity fund (PEF) through a limited partnership and the regulation in which the PEF not be treated as an NFBO has been amended. And the current limit on the amount an NFBO can invest into such PEF and not be regarded as an NFBO (10%) will be raised to 18%. Moreover, the maximum amount of which affiliated companies can jointly invest into such PEF and not be regarded as an NFBO (30%) will also be raised to 36%.In the past, the National Pension Service (NPS) was generally perceived as being ineligible to become a major shareholder of a bank holding company because it was considered an NFBO. However, if certain criterions are met, it will not be deemed as an NFBO.Relating to Regulation on Non-bank Financial Holding CompaniesFour months after the promulgation of the amendments to the Financial Holding Companies Act, a non-bank holding financial company will be allowed to take controlling ownership of non-financial companies. Fi
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Jul 17, 2009

SME Loans & Credit Guarantees in the First Half of 2009

Bank LoansLoans provided by the 18 domestic banks to small and medium-sized enterprises (SMEs) in the first half of 2009 increased by KRW 16.2 trillion from KRW 422.4 trillion to KRW438.6 trillion as of end-June.In June alone, the preliminary net increase in SME loans was KRW1.1 trillion won, but if you take into account loan dispositions and write-offs, it rose KRW3.1 trillion.Fast Track ProgramSince the Fast Track program got started on October 13, 2008, a total of 9,803 companies have been extended KRW17.7 trillion in support, KRW4.7 trillion of which was provided to those having incurred losses in KIKO and other currency options.A total of KRW2.4 trillion was extended to 1,929 companies through the Fast Track program in June, including 716 new applications.Due to improving internal liquidity status, the number of newly registered companies for support has been continually on the decrease since March, 2009.Support through the Center of the SME Financial OmbudsmanSince the Center of the SME Financial Ombudsman opened on September 11, 2008 up until end-June 2009, a total of 2,821 cases were heard of which 49.2% or 1,387 cases were merited with KRW1,161.4 billion in support from the banks.In particular, the six SME Financial Support Offices located in industrial parks counseled 658 cases and accepted 35.3% or 232 cases for support between February 23 and June 30.Guarantees Bank Loan Maturity ExtensionsSince the start of expansion of guarantees on February 16, there has been KRW24.7 trillion in new guarantees to ease the burden on SME liquidity status. Since the peak in March (KRW5.9 trillion), it has been on the decrease and stabilizing.Despite the slowing of SME lending increase of KRW16.2 trillion from KRW35.1 trillion last year, maturity extensions rose to KRW16.4 trillion from KRW15.1 trillion a year earlier. The rollover ratio consistently showed over 90%.In the first half of 2009, KRW16.7 trillion (KRW3.8 trillion in June) was extended in support of core busin
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Jun 29, 2009

FSB Inaugural Meeting in Basel

The Financial Stability Board (FSB) held its inaugural meeting in Basel on 26-27 June, the first meeting since its re-establishment as the FSB with an expanded membership and a broadened mandate. The FSC Chairman, Dong-Soo Chin and the BOK Governor, Sung-Tae Lee attended the meeting as Korea’s official representatives.The FSB, which was re-established in April 2009 as the successor to the Financial Stability Forum (FSF), brings together national authorities responsible for financial stability in significant international financial centers, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. It is currently chaired by Mario Draghi, Governor of the Bank of Italy.The new structures of the FSB include, in addition to the FSB Plenary, a Steering Committee and three Standing Committees – for Vulnerabilities Assessment; Supervisory and Regulatory Cooperation; and Standards Implementation.Representing Korea, the FSC has been included in the Steering Committee among 23 other country representatives and international standard-setting bodies (SSBs). The term of service for the Committee members is two years.The Steering Committee will be chaired by the FSB Chair and will provide operational guidance between Plenary meetings to carry forward the directions of the FSB. The Committee will also be responsible for providing guidance and monitoring of the work progress, as well as coordination between Working Groups. It will also be conducting Joint Strategic Reviews on new international standards and policies put forth by SSBs.The Steering Committee’s composition is decided by the FSB Chair in a manner that ensures maximum effectiveness in taking forward the FSB’s work while having regard to balanced representation in terms of geographic regions and institutional functions. The Committee ensures effective information flow to the full membership.The three Standing Committees –
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Jun 12, 2009

SME Loans and Credit Guarantees in May 2009

Bank LoansContinuing its upward trend since the beginning of the year, the month-on-month net increase in loans provided by the 18 domestic banks to small and medium-sized enterprises (SMEs) grew by KRW3.2 trillion from KRW434.5 trillion in April to KRW437.7 trillion in May.During the first five months of the year, the net increase in SME loans was KRW15.2 trillion, and KRW17.3 trillion when the actual support amount is added, including deposit-loan nettings.Fast Track ProgramDuring May, a total of KRW2.0 trillion was extended to 893 SMEs through the Fast Track program. Demand for loans through the program has been slowing since March due to improved financial conditions of SMEs following the liquidity injections.From October 13, 2008 to May 30, 2009, a total of 9,087 SMEs were extended KRW15.3 trillion in support, including 588 companies that received KRW4.0 trillion for losses stemming from KIKO contracts.Support through the Center of the SME Financial OmbudsmanDuring May, the Center of the SME Financial Ombudsman heard 232 cases and extended KRW66.9 billion in support. From September 11, 2008 to May 31, 2009, a total of 2,613 cases were heard of which 47.6% or 1,245 cases were merited with KRW990.7 billion in support from the banks.In particular, the six SME Financial Support Offices located in industrial parks counseled 551 cases and accepted 171 or 31.0% of the cases for support between February 23 and May 29.Guarantees Bank Loan Maturity Extensions Future SupportIn May, new guarantees more than tripled to KRW4.4 trillion from KRW1.5 trillion over the same period last year. But the uptrend in the applications for and issuance of guarantees, which shot up until March this year, started slowing in April.Maturity extensions have also been running smoothly with the average maturity extension of guarantees of KRW3.2 trillion and an average maturity extension rate of 94.3% in May.During the first five months of the year, there was KRW13.1 trillion in support for core
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May 15, 2009

FSC Chairman, Dong-Soo Chin Meets Foreign Correspondents

I. GreetingsDistinguished members of the Seoul Foreign Correspondents’ Club, and ladies and gentlemen,It’s great to be here with you and I thank you for coming.I also thank the Seoul Foreign Correspondents’ Club for helping us arrange today’s meeting and giving me a chance to speak to foreign correspondents about Korea’s policy response to the global financial crisis.It is my hope that today’s meeting will shed new light on recent market and policy developments in Korea and what you can expect going forward in terms of financial policy from the FSC.II. The Financial Crisis and Korea’s ResponsePolicymakers in the U.S. and other major countries have responded aggressively and forcefully to the global financial crisis.With many characterizing the crisis as the worst since the Great Depression, there was more than ample justification for bold policy measures.Korea’s policymakers acted in a similarly bold fashion to cushion the impact of the crisis on the financial system and the broad economy.In terms of financial policy, we had two broad goals to accomplish: safeguarding the financial markets and reinstating the financial sector as the patron for thereal economy.Safeguarding the Financial MarketsAs the financial crisis began to spread around the world, it became clear to us that we had to act swiftly on several fronts to avoid systemic risk, and maintain the stability of the financial markets.To stabilize the foreign currency market, the government provided external debt guarantees for domestic banks and signed currency swap arrangements with major countries.On the other hand, to bring back stability to the financial markets, interest rates were cut and the Bond Market Stabilization Fund was created to increase liquidity and help restore the flow of credit to the real sector.Steps were also taken to prevent market instability due to abrupt capital outflow from the short-term money market.Reinstating the Financial Sector as the Patron for the Real Eco
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May 15, 2009

Opening of the Fn Hub Korea, Busan

The opening ceremony of ‘Fn Hub Korea, Busan’ will be held on May 15, 2009 at 2p.m. Fn Hub Korea, Busan was established to support Busan (Munhyeon), designated as a specialized financial cluster on January 28, 2009, develop into a global financial center.More than 30 representatives from financial institutions and related agencies will be present to celebrate the opening of Fn Hub Korea, Busan, including the FSS Governor, Jong Chang Kim, the Mayor of Busan, Nam Sik Hur, members of the National Assembly, Byung Soo Suh, Jong Hoon Kim and Jin Bok Lee, the President of the Busan Metropolitan Council, Jong Mo Je, as well as the Chairman of the Foreign Banks Group, Michael Hellbeck.Fn Hub Korea, Busan will assist in the promotion of Busan as an attractive business destination for global financial companies as well as provide assistance to domestic financial companies planning overseas expansion. It will also provide one-stop services to support with regulatory approval processes and work to resolve any business difficulties and obstacles encountered by the financial companies to contribute to the growth and development of Busan into a financial center specializing in marine related finance* and derivatives.* For the development and the transaction of financial products related to the marine industry such as shipbuilding, marine transportation, and logistics.* Please refer to the attached PDF for details.
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May 13, 2009

SME Financial Support Results (April 2009)

1) Bank LoansDespite the economic slowdown, loans provided by 18 domestic banks to small and medium-sized enterprises (SMEs) increased to total KRW434.3 trillion as of end-April this year on the back of expanded guarantees and maturity extensions.For the first four months of 2009, the net increase in SME loans was KRW12.0 trillion from the end of last year. When adding the actual support amount, including SME bank deposit-loan nettings, which is to be reflected in MOU evaluations, the net increase amounted to KRW13.7 trillion.In April alone, the preliminary net increase in SME loans was KRW2.2 trillion won, lower than a monthly average of KRW3.0 – 3.7 trillion during the first three months of the year. The drop was largely attributed to NACF’s KRW900 billion policy fund coming due and sluggish overall demand for capital including slowed issuance of credit guarantees.More recently, conditions have also turned in favor of small and medium-sized companies, as witnessed with the Business Survey Index going up from 56 in January 2009 to 83 in April.2) Fast Track ProgramKeeping up with the high pace set in January this year, a total of KRW2.6 trillion was extended to 1,231 companies through the Fast Track program in April.Since the Fast Track program was initiated on October 13, 2008, a total of 8,194 companies have been extended KRW13.3 trillion in support, KRW3.8 trillion of which was provided to 583 companies that had incurred losses in KIKO and other currency option contracts.3) Guarantees Bank Loan Maturity ExtensionsIn April, there was KRW4.9 trillion in new guarantees, 3.1 times more than the KRW1.6 trillion issued during the same period last year. But as the number of applications for guarantees has fallen on month by 14.8% to 66,307 cases inApril, the pace of increase is slowing for both guarantee applications and their issues.Also last month, there was KRW3.6 trillion in maturity extensions with a 95% rollover rate.From January to April, KRW9.5 trillion was
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