Press Releases - Financial Services Commission

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Dec 20, 2022

Government Approves Revision Bill to Strengthen Rights of General Shareholders in Split-off of Listed Company

The government approved an amendment to the Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSCMA) at the state council held on December 20. This amendment is a follow-up to the measures to improve protection for general shareholders in IPO of split-off subsidiary announced on September 5. Key Details and Anticipated Effect Until the end of this year, all three layers of general shareholder protection system regarding IPO of split-off subsidiary become established and begin operation. With this system, it is expected that companies will pay sufficient attention to the rights and interests of general shareholders when they pursue a split-off and losses incurred to general shareholders in a split-off of a subsidiary, which has been pointed out repeatedly, will be effectively prevented. a) (Enhanced Disclosure) From October 18 this year, companies seeking to split off a subsidiary disclose their business restructuring plan including the purpose of split-off, anticipated effect, shareholder protection measures and listing plan on their material fact reports. - As a result, general shareholders and investors can get adequate information related to the split-off and make informed decisions at general meetings of shareholders, when exercising the right to request companies to purchase their shares and when making investments. b) (Right to Request Company to Purchase Shares) The amendment approved today grants shareholders, who dissent from the companys split-off decision, a rightto request that company purchase his or her stocks when the companys board of directors reaches a resolution to make a split-off. - If a majority of general shareholders is opposed to the split-off or that a potential drop in company value is triggered, pursuing a split-off in itself can be difficult. Therefore, in essence, listed companies can pursue a split-off only when they prepare shareholder protection measures in place and have convinced general shareholders
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Dec 19, 2022

FSC Unveils Measures to Improve the Soundness of IPO Market

The FSC unveiled measures to bolster the soundness of the initial public offering (IPO) market. The key measures include (a) allowing bookrunners to test the waters through demand survey to determine an appropriate price band of an IPO, (b) making bookrunners check institutional investors abilities to pay for stocks under their responsibility and, after that, accept subscriptions and carry out allotment of shares, and (c) increasing the limit range of the quotation price on the day of IPO to promote formation of an equilibrium price early on. Background An initial public offering (IPO) is a gateway for unlisted firms going public as well as an essential mechanism in capital markets. In this regard, it is important to make sure that price discovery function in public offering markets works properly and enables investors to make stable investments at fair value. Although the recent IPO market boom has somewhat subsided, the following behaviors that threaten a sound order in the market still exist. First, it can be challenging to determine the right price band for an IPO because assessing how market demand will change as an IPO price shifts remains difficult. Second, at the subscription stage, investors subscribe in shares which far exceed the actual demand to secure the portion of shares they hope to get allocated. Such actions set up a vicious cycle where investors fictitiously oversubscribe, resulting in excessive competition, which in turn leads to oversubscription. Third, after going public, there are worries about harm to investors from the phenomenon where stock quotation prices immediately reach the upper limit price on the first day or on the first and second days of an IPO, causing a situation of de facto transaction halt, and then collapse. Against this backdrop, in order to ensure that the IPO market can serve its original goal of helping unlisted firms entry into public offering markets and to promote the development of the IPO market based on more fairnes
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Dec 19, 2022

Authorities Meet with Banks to Discuss Resumption of Bank Bond Issuance

The FSC held a meeting with the related authoritiesand the banking sector on December 19 to examine the banking sectors lending and borrowing situation and discuss resumption of bank bond issuance. At the meeting, participants shared a common assessment that financial markets such as the bond market and foreign exchange market are gradually returning back to stabilityas a result of expectations for a slower pace of monetary tightening at home and abroad, as well as the government and financial institutions initiative to stabilize the market. However, as there still exist uncertainties in financial markets concerning price levels, trends of economic slowdown and the pace of monetary tightening in major advanced economies, participants reached to the same view that it is still vital to maintain a state of vigilance in responding to market situations. Financial authorities expressed appreciation for the active market stabilization efforts the banking sector showedand said that authorities will continue to make available policy-based support programs (bond market stabilization fund, corporate bond and CP purchase program, etc.) to ensure market stability. At todays meeting, participants discussed how to restart bank bond issuance, which has been refrained so far for the goal of maintaining stability in the bond market. The banking sector raised the issue that there currently exist diverse types of demands for issuing bank bonds, for instance, to deal with their outstanding bonds coming to maturity soon, to respond to the outflow of consumer deposits, and to expand corporate loans, etc. In particular, considering the recent signs toward stabilization in the bond market and the year-end lending and borrowing needs of banks, the banking sector suggested the gradual restart of bank bond issuance at least for the purpose of refinancing bonds that are about to mature. Taking into account the latest supply and demand situation of bond markets as well as expert opinions, partic
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Dec 13, 2022

New Legislative Bill on Individual Debtor Protection Approved at Cabinet Meeting

The government approved a new legislative bill on the management of individual financial debt and the protection of individual debtors at a cabinet meeting held on December 13. This bill aims to strengthen rules regarding creditor financial institutions financial debt and the protection of individual debtors. Background Since personal credit loans became widely prevalent in the 2000s, authorities have made a series of improvements to arrive at the current framework on the individual debtor protection system.As a result, considerable improvements have been made in how debt collection should be carried out. However, from the perspective of individual delinquent debtors, it has been pointed out that they still face excessive penalty fees for overdue debt and harsh debt collection because of the following reasons. First, there exists no legally supported process through which a debtor can directly bargain with a financial institution to enter into a debt settlement quickly.Second, the currently available Fair Debt Collection Practices Act has limits in its capacity in terms of providing support for debtors recovery and enhancing their rights and interests because it passively prohibits certain types of debt collection activities such as assault, battery and threat. Third, collection on delinquent debt held by creditor financial institutions are increasingly being performed by third parties via entrustment and transfer, which led to debt collection practices with negligence on consumer protection and a focus on demanding debt payment. In order to address these issues, authorities have prepared a system of rules aimed at achieving proper balance in the rights and obligations of creditor financial institutions, debt collectors and individual debtors. Key Details a) Scope of rules and definitions: This bill sets forth rules regarding the overall management of individual financial claim after it becomes delinquent. The term individual financial claim means a debt claim held
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Dec 13, 2022

Financing Support from KAMCO to be Available for Businesses Facing Temporary Insolvency Risk

The FSC announced that a revision bill on the Enforcement Decree of the Act on the Establishment of Korea Asset Management Corporation (the Act hereinafter) has been approved at a cabinet meeting held on December 13. This revision bill lays a legal foundation enabling the Korea Asset Management Corporation (KAMCO) to provide financing support to the enterprises showing signs of insolvency and those undergoing a workout process. Background To be prepared for deterioration in business conditions, such as increases in interest rates and raw materials prices, financial institutions have been managing the insolvency risk of borrower companies through credit risk assessment and joint administrative proceedings (workouts hereinafter) pursuant to the Corporate Restructuring Promotion Act. However, it has been pointed out that a quick turnaround from insolvency risk is difficult for the enterprises showing signs of insolvencyand those undergoing a workout processas specified by the Corporate Restructuring Promotion Actdue to inadequate availability of new financing injection. Against this backdrop, authorities have been seeking ways to set up a new financing support program for those companies administered by the KAMCO. Key Revision Details The revision bill on the Enforcement Decree of the Act expands the type of eligible entities that can receive financing support from the KAMCO. Currently, the scope of eligible entities is limited to the enterprises undergoing or completed a court administered corporate rehabilitation process. However, with this revision bill, the type of businesses eligible for support will be expanded to include enterprises showing signs of insolvency and those undergoing or completed a workout process. This will allow the KAMCO to provide more wide-ranging support to businesses facing temporary insolvency risk and help them make a turnaround quickly. Further Plan The revision bill for the Enforcement Decree of the Act will take effect on the day of pro
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Dec 08, 2022

Household Loans, November 2022

In November 2022, the outstanding balance of household loansacross all financial sectors declined KRW3.2 trillion (m-o-m). Household loans continued to show a declining trend as the year-on-year growth rate in November dropped for the first time since relevant statistics became available in 2015.Financial authorities will stably manage the grow rate of household debt and work to seamlessly implement the normalization of relevant loan regulations to help alleviate the difficulties of non-speculative homebuyers. (Overall) Household loans across all financial sectors dropped KRW3.2 trillion in November. The growth rate (down 0.3 percent, y-o-y) fell for the first time since relevant statistics began to be collected in 2015, which shows a sustaining trend of a slowdown since the second half of last year. (By Type) Mortgage loans grew at a slower rate and other types of loans fell more rapidly from the previous month, leading to acceleration in the overall pace of the decline in household loans. - (Mortgage Loans) Mortgage loans rose KRW0.5 trillion in November, growing at a slower rate compared to the previous month (up KRW2.0 trillion), led by jeonse loans. - (Other Types of Loans) Other types of loans declined at a faster rate (down KRW3.6 trillion) compared to a month ago (down KRW2.2 trillion), led by a drop in credit loans. (By Sector) Household loans in the banking sector continued to drop while the nonbanking sector also saw a shift to a decline. - (Banking Sector) Banks saw a drop of KRW1.1 trillion in household loans. Mortgage loans from banks grew KRW1.0 trillion,rising at a slower rate compared to the previous month (up KRW1.3 trillion), as government-sponsored mortgage lending and group lending for new apartment subscription went up KRW2.6 trillion and KRW0.6 trillion, respectively. Other types of loans from banks fell KRW2.0 trillion, declining at a faster rate compared to the previous month (down KRW1.9 trillion), led by a drop in credit loans (down KRW1.8
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Dec 07, 2022

FSC Chairman Attends KDB NextRound's Fintech Special Round and Speaks about Expanding Fintech Investment

FSC Chairman Kim Joo-hyun attended the Fintech Special Round event hosted by the Korea Development Bank NextRound on December 7. At the event, Chairman Kim briefed on the direction of governments policy aimed to drive innovation in digital finance and cultivate the fintech industry, while encouraging fintech startups that seek to attract investment. Summary of Congratulatory Remarks by FSC Chairman FSC Chairman Kim Joo-hyun highlighted that the future of our financial industry is dependent on how well the government responds to the fourth industrial revolution and digital transformation as the pace of such shifts accelerates. To follow these shifts, the government has so far spared no effort to come up with multifaceted measures such as introduction of a financial regulatory sandbox program and creation of the fintech innovation fund. However, as global monetary tightening and the three highs such as inflation, high exchange rates and high interest rates, etc. intensify economic uncertainty, the venture business and startup markets around the globe are facing the severe funding winter, and fintech sectors are struggling with this difficult situation. Against this backdrop, Chairman Kim underscored his plan to strengthen policy support to help fintech companies to overcome this hard time and enlarge innovation capacity to drive the future of financial industry. The following shows details of this policy support. I. Expanding Availability of Funding Support for Fintech Startups The authorities will offer support to help innovative businesses grow such as introducing the innovation growth fund worth of KRW15 trillion for five years from 2023 and a new Silicon Valley-style lending program for venture businesses, which will offer loans combined with zero-interest rate bonds with warrants. Furthermore, the authorities plans to bolster the financial support system specialized for fintech businesses with increasing the size of the fintech innovation fund from KRW500 billion
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Dec 07, 2022

Authorities Hold Meeting to Monitor Flow of Funds and Risk Factors in Financial Markets

On December 7, the FSC met with the pertinent authoritiesto review the flow of funds and risk factors in the financial sectors and to go over future response plans. Participants in the meeting agreed that recent volatility in the domestic money market appears to be stabilizing, which is supported by expectations for a slower pace of tightening monetary policy both domestically and internationally as well as the implementation of a number of market stabilization measures. Participants concurred that caution must be exercised in light of the special funds situation involving year-end account settlements and the December meeting of the U.S. Federal Open Market Committee. Participants shared the opinion that consistent government policy support and efforts by the financial industry are necessary to firmly ensure market stability. The Bank of Korea (BOK) and financial authorities will work to smoothly implement the market stabilization programs set up to stabilize the money market. a) The bond market stabilization fund is currently undergoing another capital call, which will be finished by January 2023. Additionally, the BOK intends to provide liquidity to the financial institutions it has invested in, up to KRW 2.5 trillion. b) The Korea Development Bank (KDB), Industrial Bank of Korea (IBK), and Korea Credit Guarantee Fund (KODIT) are currently operating a corporate bond and CP (commercial paper) purchasing program worth a total of KRW11 trillion. In particular, the P-CBO (primary collateralized bond obligation) program, worth KRW5 trillion, will start running the following year to help large businesses, middle market enterprises, and SMEs issue corporate bonds. c) The PF-ABCP (project finance asset backed commercial papers) purchasing program for those backed by securities companies is currently providing prompt assistance in response to market demands from the PF-ABCPs approaching maturity (total KRW1.8 trillion).The PF-ABCP purchasing program for those backed by con
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Dec 06, 2022

FSC Plans to Temporarily Expand Government-sponsored Mortgage Loan Program

The authorities plan to temporarily operate a special Bogeumjari Loanby integrating Relief Conversion Loanand Conforming Loanand existing Bogeumjari Loan. Recent interest rate hikes resulting from global monetary tightening have significantly increased households debt servicing burden. In this regard, aiming to reduce the debt payment burden of more borrowers, the government will temporarily run a special Bogeumjari Loan that integrates together the regular type of Relief Conversion Loan, Conforming Loan, and the existing Bogeumjari loan for a year from the beginning of 2023. For the newly introduced special Bogeumjari Loan, debtors whose house price is KRW900 million or less will be able to apply regardless of their income.Maximum loan amount will be increased from KRW360 million to KRW500 million. Borrowers can use this loan for purposes of purchasing a new house, replacing existing loans or returning security deposits. The special Bogeumjari Loan will be granted at a single interest rate in the same way as the current Bogeumjari Loan program. Meanwhile, a concessionary interest rate will be applied, which is decreased to a certain extent from an appropriate interest ratethat is calculated with the current method. The specification of the loan including detailed implementation schedule and concessionary rate will be announced later, after considering computational adaptation, preparation periods for financial institutions, and etc. * Please refer to the attached PDF for more details.
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Dec 01, 2022

Authorities Plan to Disclose Identity of Entities Committing Unfair Trading Practices

As a way to bolster prevention of unfair trading practices in capital markets, the FSC plans to disclose the identity (corporate name, etc.) of those who violate capital market regulations such as restriction of short sales and prohibition of market disturbances and receive a disposition of a penalty surcharge or an administrative fine for that violation. This measure shall apply to the violators receiving sanctions at the 22nd regular meeting of the Securities and Futures Commission (SFC) scheduled to be held in December 2022. Their identities will be announced through the FSC website in February 2023. Background The FSC has gradually extended the scope and detailsstock items, dates and penaltiesof disclosure of the SFC resolutions on sanctions that are made available for unfair trading practices in capital markets. However, the identity of violators is not being disclosed currently due to the potential misuse of their corporate or individual financial transaction information by a third party. Nonetheless, there is a growing need to secure effectiveness of sanctions measures imposed on unfair trading activities in capital markets such as illegal short sales. Therefore, after a careful consideration, the FSC decided to expand the scope and details of disclosure of sanctions by unveiling the identity of violators. Disclosure of Identity of Entities Violating Capital Market Regulations If an investigation led by financial authorities ends up with sanctionsof imposing a penalty surcharge or an administrative fine, the identity (corporate name, etc.) of the violator will be unveiled. Although the violators that become subject to sanctions are mostly corporate entities, in some cases, individuals also become subject to sanctions when they commit unfair trading practices such as activities of disturbing market order. If unfair trading activities in capital markets under the investigation led by financial authorities are subject to criminal punishment,in consideration of t
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Nov 29, 2022

Taskforce on Improving Internal Control of Financial Companies Announces Interim Results

The taskforce on improving rules regarding financial companies internal control announced its interim discussion results on November 29. The key discussion details focus on strengthening the role and responsibility of chief executives, boards of directors and executive officers over their companies internal control affairs to boost the effectiveness of internal control mechanisms. Background Pursuant to the requirement for internal control standards and procedures (Article 24-1) prescribed under the Act on Corporate Governance of Financial Companies, all financial companies are currently operating their own internal control mechanism to prevent illegal activities committed by their executive officers or employees and the like. It is aimed at avoiding the risk of potential loss in the future and erosion of a companys reputation related to the soundness of company management and consumer protection. Since its introduction, there is an increased level of awareness throughout financial sectors about the significance of internal control. However, in reality, as setup and operation of an internal control system requires considerable efforts and costs, different companies have different levels of internal control standards and procedures, which vary significantly depending on the business strategy and willingness of the management. The more a company focuses on short-term performances, the more its internal control will remain perfunctory, which will probably prove inadequate in its function and effectiveness for the operation in the field. In particular, the successive occurrence of a number of financial accidents such as incomplete sales of financial products and large-scale embezzlement recently has raised the awareness and concerns about internal control of financial companies. Apart from inflicting losses to consumers and shareholders, financial accidents can have a significant impact on the overall health of the economy and society with a degradation of trust in fina
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Nov 28, 2022

Authorities Hold Policy Seminar on Making Improvements to Capital Market Regulations

The FSC, the Korea Exchange (KRX) and the Korea Capital Market Institute (KCMI) jointly held a policy seminar for alleviation of the Korea discount on November 28. The theme was improving the consistency of Korea and global capital markets rules and regulations. In his opening remarks, FSC Vice Chairman Kim So-young outlined the governments policy direction for regulatory improvements in Korean capital markets. The policy draft has been prepared by the FSC through a taskforce with private sector experts. Summary of Vice Chairmans Remarks In our capital markets, there are outdated regulations and unreasonable practices that have been first introduced decades ago and kept for too long without being scrutinized for their validity, some of which are nonexistent in the economies with advanced financial markets. These regulations and practices made sense and were considered necessary at the time of their introduction. However, in order to establish a system suitable for the current status of Korean capital markets and to satisfy the needs of a new era, our capital markets should bravely break the familiar but outdated framework and undertake reforms. (Registration for Foreign Investors) Foreign investor registration has long been regarded as one of major outdated regulations that deviate from global norms. This regulation requires foreign investors registration before trading listed securities in the Korean capital markets. Under the registration scheme, foreign investors are issued investment registration certificates, and all of their transaction data are recorded. This rule has been in force for more than 30 years since Korean capital markets were opened to foreign investors in 1992. Suppose that we acquire or dispose of listed stocks in a foreign country. If we had to register with the countrys financial authority in advance and if each individuals transaction records are piled up in real-time, it will induce not only procedural but also psychological burden. In advan
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Nov 24, 2022

FSC Chairman Meets with Venture Startups and Holds Talks on Boosting Investment

FSC Chairman Kim Joo-hyun visited Mapo Front1, the largest startup support center in Korea, on November 24, where he held talks with venture businesses, venture capitalists and financial institutions. Chairman Kim listened to difficulties and complaints from startups and venture businesses and also asked financial institutions to increase investment and support for startups and venture businesses. Summary of FSC Chairmans Remarks Startups and venture businesses are essential for increasing our economys growth potential and creating jobs. Thus, it is important to establish an ecosystem where they can thrive. Meanwhile, to improve our economys competitiveness, more startups and small businesses with technological prowess and innovativeness need to be fostered even in times of investment drought. Therefore, the FSC and policy financial institutions will strengthen their support for innovative and promising venture businesses by providing more funding opportunities and acting as a priming pump to attract more private sector investments. For this, the innovative growth fund worth KRW15 trillionwill be created over the next five years to support SMEs and startups in new industries such as semiconductor and artificial intelligence (AI) and to supply venture businesses the funds in need to grow up into unicorn companies. Second, policy financial institutionsKorea Development Bank (KDB), Industrial Bank of Korea (IBK) and Korea Credit Guarantee Fund (KODIT)will introduce a lending program worth KRW6.3 trillion, which will provide funds to startups and venture businesses based on loan examinations focused on their growth potential rather than their financial statements and the value of collaterals. In particular, the IBK will introduce a new lending program for venture businesses, modeled after those observed in Silicon Valley, which will offer loans with zero-interest rate bonds with warrants (BWs) attached. This program will enable early-stage venture businesses to continue
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Nov 21, 2022

FSC Plans Regulatory Reforms in Insurance Sector to Promote Digital Transformation

The FSC announced a plan to reform regulations on insurance businesses to help the insurance sector more effectively respond to emerging demands for new services and to facilitate the entry of specific business models expected by the market. The plan has been screened by the financial regulatory innovation committee at its 4th meeting held on November 14. Authorities will prepare revision bills to amend relevant laws with a goal of submitting and passing them at the current 21st term of National Assembly. Background The FSC has listened to opinions on the areas that require regulatory reforms through discussions within a taskforceon insurance sector (from February) and the survey of demands (June-July) conducted across all financial industry groups. Among 234 regulatory reform items raised by eight financial industry groups, the demand for regulatory reform in the insurance sector was particularly high (77 items). According to the taskforce and the survey, the insurance industry faces hindrance in effectively adapting to disruptive changes of business environment due to outdated and stringent regulations. First, even with a spread of digital economy based on network- and platform-based services, the level of digital transformation in the insurance market is still at a nascent stage, requiring an urgent industrial restructuring. Second, compared to insurance markets in other countries and other domestic financial markets, insurance businesses face excessive regulations for product development and asset management, which restrict insurance companies from supplying diverse types of financial products and weaken their global competitiveness.Third, there are cases where the rigor of penalizing practices and supervisory administration led to excessive restriction on the sales activities of insurance companies. For the consumer service of the supervisory authorities to deal with civil complaints, which cannot be served promptly due to the limited number of staff members an
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Nov 18, 2022

FSC Proposes Revision of Supervisory Regulation to Facilitate Credit Supply to Low-credit Individuals

The FSC plans to revise the supervisory regulation on credit service providers to help expand credit supply to lower income individuals under the current program which incentivizes outstanding credit service providers maintaining above certain levels of credit extension to low-credit borrowers. Background The current incentive program for outstanding credit service providers was first introduced to promote expansion of credit supply to the low-credit individuals following the reduction of the maximum legal interest rate from 24 percent to 20 percent in 2021. A credit service provider can be selected as an outstanding credit service provider if the amount of credit loans made to those with low credit is (a) at least KRW10 billion or (b) at least 70 percent of its total gross loan. When selected as outstanding credit service providers, they are given incentives that allow them to borrow from banks, which assist them to lower borrowing costs, and to sell their loan products via online platforms. The outstanding credit service providers are gradually taking root in the market and playing a crucial role in credit supply to low-credit individuals. With the continuation of high interest rates, if the supply of personal credit loans from credit service providers significantly shrinks due to the elevated borrowing costs, lower income individuals may face difficulties in getting loans, and illegal private lending activities may spread gradually. Therefore, authorities plan to revise the supervisory regulation on credit businesses to improve the current incentive program for outstanding credit service providers, which will contribute to its original goal of promoting expansion of credit supply to low-credit individuals. Key Revision Details Authorities will modify the requirements for maintenance of outstanding credit service providers status. Currently, outstanding credit service providers need to maintain both the total balance (at least KRW10 billion) and the ratio (at leas
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Nov 16, 2022

KoFIU Holds Talks with CEOs of VASPs and Discusses Market Situation

The KoFIU held a meeting with CEOs of five major virtual asset service providers (VASPs)in Korea on November 16 and discussed their current anti-money laundering (AML) procedures and controls on overseas withdrawal and remittance of virtual assets, and their custody and management of customer assets. With regard to the AML procedures and controls of domestic VASPs, the heads of VASPs said that the level of transparency in virtual asset transfer increased after the travel rule took effect from March 25 this year, and that they run the whitelistingand blacklistingsystems, which block transactions with high-risk traders. In particular, they said that VASPs are regularly monitoring and blocking wallet addresses that are used in crypto mixers, which split and blend virtual assets of many users together to obfuscate the origins and traces of the funds. In this regard, KoFIU authorities said that it is important to prevent money laundering taking place when users virtual assets are transferred to high-risk countries or traders via personal wallets and the likes. For this, authorities asked VASPs to establish a standard for detecting suspicious transactions and enhance screening and checking the origin of the users funds and the purpose of his or her transactions. Regarding the condition of domestic VASPs custody services for customer assets, authorities emphasized the importance of user protection efforts made by VASPs. Authorities indicated the need to set up a real-time information system on customers assets in custody and asked VASPs to closely monitor the safety of their transaction support for the self-issued virtual assets. In the wake of the recent FTX crash, authorities said that they will support the ongoing legislative efforts at the National Assembly to ensure that relevant user protection measures are discussed. The heads of VASPs said that the root of the FTX collapse was the inappropriate use of customer assets by the company management and the misuse of self
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Nov 16, 2022

Authorities Discuss Regulatory Reforms to Promote Convergence of Financial and Non-financial Sectors

The financial regulatory innovation committee held its 4th meeting on November 14 and discussed ways to improve the regulations on the separation of industrial and financial capital. The committee also discussed plans to improve the regulation on entrustment of services of financial institutions. Key Agenda Details a) Regulatory reform on separation of industrial and financial capital Regarding separation of industrial and financial capital, authorities will expand and improve the scope of permissible ancillary services and that of their permissible investment in other companies in order to promote convergence between financial and non-financial sectors as well as help improve synergetic effects between them. The principle on separation of industrial and financial capital forms an integral part of our financial system in maintaining financial stability, preventing conflicts of interests and restricting concentration of economic power. However, rapid digitalization and the Big Blurphenomenon recently require changes in the regulations on separation of industrial and financial capital. While keeping the basic framework of these regulations intact to ensure financial stability, it is essential to more reasonably regulate financial institutions ancillary services and investment in other companies in order to assist financial institutions in efficiently adapting to a changing environment, such as digital transformation and the Big Blur, and making advances. Therefore, authorities will consider various ways to decide how to recraft the regulatory scope of non-financial services that financial institutions can do, from making improvements to the current positive list approach to making a transition to a negative list approach and regulating the total amount of risks. b) Regulatory reform on entrustment of financial institutions services Authorities will encourage subcontracting and outsourcing of financial institutions by enhancing the regulatory framework for entrusting f
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Nov 14, 2022

Single-stop Online Loan Transfer System to be Set Up to Reduce Interest Burden on Consumers

The FSC announced its plan to set up a single-stop online loan transfer system on November 14 to help alleviate the burden of high interest rates on financial consumers. With recent interest rate increases, it is necessary to find ways to lessen financial consumers interest costs.The FSC plans to facilitate loan transfer,as one of these ways, allowing financial consumers to more easily swap their present loans to reduced interest rate loans. Current Market Situation Currently, there is not a lot of products for loan transfers in the personal loan market because of inconvenience for the loan applicants and lack of a relevant infrastructure.In the first place, the absence of a fully integrated online system in financial institutions has required the payment of existing loans in the offline mode,which results in time and costs for both financial consumers and financial institutions. Second, since there are very few platforms offering comparison services for loans and because there is a limited amount of information, namely, accurate information on the current loan, the cost (various fees when transferring loan) and the benefits (savings generated from lower interest rate), which can help consumers make informed decisions, borrowers still have a difficult time making a decision about the loan transfer. The FSC announced its plan to set up a single-stop online loan transfer system on November 14 to help alleviate the burden of high interest rates on financial consumers. With recent interest rate increases, it is necessary to find ways to lessen financial consumers interest costs.The FSC plans to facilitate loan transfer,as one of these ways, allowing financial consumers to more easily swap their present loans to reduced interest rate loans. Key Details of Plan a) Build an online loan transfer system between financial institutions The payment of the loan, from the request of payment to the provision of the necessary information and to the final confirmation of the payment
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Nov 11, 2022

FSC Announces Additional Measures to Stabilize Project Finance ABCP and CP Markets

FSC Vice Chairman Kim So-young presided over a meeting on November 11 with officials from the FSS, the Bank of Korea, financial industry groups and policy financial institutions to review current market situation. At the meeting, authorities discussed recent trends in financial markets, progress of the governments market stabilization measures announced earlier on October 23 and additional measures to help stabilize the CP (commercial paper) market. At the meeting, participants assessed that since the governments market stabilization programs were first announced on October 23, concerns about a severe credit crunch in bond and money markets have eased somewhat. However, relative to the corporate bond market, there are continuing challenges in short-term money market. Financial investment businesses said that thanks to clear regulatory interpretation offered by financial authorities last week to allow securities firms to purchase ABCPs (asset-backed commercial papers) guaranteed by their own companies, there is less burden of having an oversupply of ABCPs guaranteed by securities firms in the market. However, they indicated that refinancing of ABCPs (especially A2 grade) guaranteed by small- and medium-sized securities firms continues to be difficult, which has led to liquidity problems of securities firms and high levels of their CP spreads. Moreover, authorities reviewed the progress of both the public and private sector efforts to stabilize the bond markets supply and demand situation. The government has reduced the volume of government bond issuance this year. The Ministry of the Interior and Safety and local governments plan to pay back debt on municipal bonds and public corporation bonds scheduled to mature before early 2023 and preemptively prepare for portions of guaranteed debt expected to turn into determinate liabilities (total KRW3.4 trillion) through budgeting. In addition, the government is closely working with public institutions to spread out issue da
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Nov 10, 2022

FSC Introduces Revision to Supervisory Regulations to Ease Financing Burden of Homebuyers

The FSC will give advance notices of revision to several supervisory regulations between November 10 and 16 as a follow-up action to implement the housing market-related measures introduced at the 11th emergency economic meeting held on October 27 and the 3rd ministerial meeting on housing market held earlier today. The revised supervisory regulations stated below are expected to take effect from December 1, 2022. a) The loan-to-value (LTV) ratio is currently applied differentially for no-home or one-home owners in regulated areasby different locations and different price of houses. This will be raised to uniform application of 50 percent. b) Allow no-home or one-home owners who plan to purchase an apartment valued over KRW1.5 billion in designated speculation areas and high-speculation areas to finance their house with a mortgage loan. c) Raise the top LTV ratio for lower income and non-speculative homebuyerswho plan to purchase a house in regulated areas to up to 70 percent with the maximum loan amount of KRW600 million. * Please refer to the attached PDF for details.
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