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Aug 12, 2024
- Household Loans, July 2024
- In July 2024, the outstanding balance of household loans across all financial sectors rose KRW5.3 trillion (preliminary), growing at a faster rate compared with the previous month (up KRW4.2 trillion). * Change (in trillion KRW, m-o-m): -1.9 (Feb 2024), -4.9 (Mar), +4.1 (Apr), +5.3 (May), +4.2 (Jun), +5.3 (Jul)p (By Type) Home-backed mortgage loans rose KRW5.4 trillion, growing at a slower rate compared with the previous month (up KRW6.0 trillion), as banks saw a smaller increase in mortgage loans (up KRW6.2 trillion up KRW5.6 trillion). Other types of loans fell KRW0.2 trillion with declines seen in both the banking (down KRW0.3 trillion down KRW0.1 trillion) and nonbanking (down KRW1.5 trillion down KRW0.1 trillion) sectors. However, the pace of the decline decelerated compared with the previous month (down KRW1.8 trillion). (By Sector) Household loans expanded at a slower rate in the banking sector and declined at a slower rate in the nonbanking sector. In July, banks saw an increase of KRW5.5 trillion in household loans, a drop from KRW5.9 trillion in the previous month. The decline was led by the slowdown in mortgage loans (up KRW6.2 trillion up KRW5.6 trillion) as group lending for new apartment subscription fell KRW2.0 trillion from a rise of KRW0.1 trillion a month ago. Other types of loans declined at a slower rate compared with the previous month (down KRW0.3 trillion down KRW0.1 trillion). In the nonbanking sector, household loans declined at a significantly slower rate compared with a month ago (down KRW1.7 trillion down KRW0.2 trillion), due mainly to a base effect from the previous month. Mutual finance businesses (down KRW1.2 trillion) and insurance companies (down KRW0.02 trillion) continued to see declines, while specialized credit finance companies (up KRW0.8 trillion) and savings banks (up KRW0.2 trillion) saw increases. (Assessment) Household loans have been on an upward trajectory since April this year led by policy loans and mortgage loans from
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Aug 12, 2024
- FSC Chairman Holds Meeting with Listed Companies to Boost Corporate Value-up Efforts
- Chairman Kim Byoung Hwan of the Financial Services Commission held a meeting with a group of listed companies and related organizations to boost their efforts to participate in the Corporate Value-up Program on August 12. Together with related organizations, Chairman Kim said that the FSC will provide active support to promote companies self-driven efforts to participate in the Corporate Value-up Program. Todays meeting was joined by three companies (Kiwoom Securities Co., Meritz Financial Group Inc., and HK inno.N Corp.) that have already filed a voluntary disclosure or issued a prior notice of disclosure for their value-up plans and five other listed companies. Key officials from the Korea Exchange, Korea Listed Companies Association, KOSDAQ Listed Companies Association, Korea Financial Investment Association, and the value-up programs advisory group also attended the meeting. The following is a summary of FSC Chairman Kims remarks at the meeting. Regarding last weeks stock market volatility, the financial authorities are well aware of the concern about the relatively large fall experienced by our stock market and the slow pace of its recovery. In order to make our stock market more robust and resilient, it is important to boost participation in the Corporate Value-up Program, so that we can enhance the competitiveness of listed firms and the stock market. Moreover, making improvements to our capital market through the Corporate Value-up Program is also important from the perspective of seeking to transform our economic structure from the current debt-reliant model to an equity-centered approach. Making improvements to the current debt-dependent structure of our economy will help to make our economy more dynamic, enhance stability, and contribute to sustainable growth. Since introducing the outline of support measures for the Corporate Value-up Program in February this year, the government has worked to swiftly implement follow-up measures. The authorities will co
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Aug 08, 2024
- FSC Vice Chairman Speaks on Strengthening Sanctions against Unfair Trading Activities in Capital Market
- The Financial Services Commission announced that a policy seminar on ways to strengthen sanctions against unfair trading activities in capital market was held by the Korea Exchange (KRX) and Korea Capital Market Institute (KCMI) on August 8. Vice Chairman Kim Soyoung of the Financial Services Commission attended the seminar and delivered congratulatory remarks. In his speech, Vice Chairman Kim outlined the governments past efforts and progress so far and plans to introduce more diverse sanctions mechanisms targeted at unfair trading activities. The following is a summary of Vice Chairman Kims remarks. In order to more effectively detect and strictly punish unfair trading activities, the government has worked to improve the capital market investigation regimes and bolster sanctions, while boosting incentives for reporting. In this regard, first, a well-coordinated investigation network has been established among related agencies, enabling frequent inter-agency sharing of information about ongoing investigations. Second, against the three major types of unfair trading activities, which include the use of material nonpublic information, price manipulation, and dishonest transactions, imposing penalty surcharges has now become available as a sanctions mechanism. Third, incentives for whistleblowers has been increased to encourage wrongdoers and wrongdoing to be reported. However, the existing sanctions mechanisms have limits in effectively dealing with the ever evolving and complex patterns of unfair trading activities. The current sanctions mechanisms, which focus on criminal punishment and monetary penalty, often take long times to arrive at a final court sentence and are rather ineffective at preventing recidivism. Major overseas economies, such as the U.S. and Hong Kong, have adopted non-monetary sanctions mechanisms to combat unfair trading activities. After closely studying these cases from overseas, the government is seeking to introduce more diverse sanctions me
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Aug 06, 2024
- Financial Support Programs Available for Enterprises Affected by E-commerce Payment Delays
- The Financial Services Commission announced that the previously announced KRW560 billion-plus financial support programs intended to help the sellers affected by recent payment delays at e-commerce platforms will begin to be provided from August 7. As of the end of July, the volume of missed payments by e-commerce platforms (TMON and WeMakePrice) stood at about KRW274.5 billion. As the size of delayed payments is expected to grow in the future, authorities will also consider expanding the size of assistance if it becomes necessary. First, from August 7, sellers that have been hit by payment delays can apply for maturity extension and payment deferment on existing business loans and guarantees for up to one year. In addition, from August 7, the support for maturity extension and payment deferment will also be made available for accounts receivable loans offered by three banks (Shinhan, KB Kookmin, and SC Banks). Second, the Industrial Bank of Korea (IBK) and Korea Credit Guarantee Fund (KODIT) will make available guaranteed loans worth KRW300 billion-plus. Individual businesses are eligible to apply for up to KRW3 billion. The application review process will be streamlined for those seeking to get up to KRW300 million. KODIT will begin to accept application for guarantees from August 9. The Ministry of SMEs and Startups will also make available financing support worth about KRW200 billion at low interest rates through Korea SMEs and Startups Agency (KOSME) and Small Enterprise and Market Service (SEMAS). Third, the government, related organizations, and industry groups will continue to operate an emergency response team to make sure that the financial support programs are effectively operated and proper consulting can be provided to those needed. * Please refer to the attached PDF for details.
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Aug 05, 2024
- FSC Chairman Holds Meeting and Emphasizes Importance of Comprehensive Efforts to Manage Debt Risks
- Chairman Kim Byoung Hwan of the Financial Services Commission held a meeting with macroeconomic and financial market experts on August 5 to review financial risks in four specific sectors, which include debt risks in the household, real estate project finance, and small business sectors, and the soundness of the nonbanking sector, and discussed ways to effectively manage these risks. The following is a summary of Chairman Kims remarks at the meeting. A Summary of Chairmans Remarks Current economic conditions at home and abroad appear to be reaching an inflection point, shown by recent monetary policy decisions in major economies, economic forecasts in the U.S., and domestic housing market situation. Against this backdrop, it is necessary to strengthen our efforts to examine and respond to market risks. While focusing our efforts to promptly and closely manage debt risks in four specific areas, which have been accumulated from the past, it is also essential to take steps to preemptively manage newly emerging risk factors. As there exist concerns about the weakening of the U.S. economy, major stock markets around the world have tumbled recently.Therefore, it is also necessary to maintain close monitoring over volatility in stock markets. The government is focused on working to bolster our stock markets resilience and establish a more credible and reliable market environment for investors by seeking structural improvements over a medium- to long-term. To this end, the government will continue to make efforts to ensure seamless implementation of the Corporate Value-up Program and short sale reform measures. Along the same lines, the government will continue to work on tax support measures that can help to boost investments in the domestic stock market. The relatively high levels of debt-to-GDP ratioand reliance on debt make domestic financial system vulnerable to external shocks. In order to ensure sustainable growth and make our economy more resilient and to guarantee
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Jul 29, 2024
- Authorities Announce Financial Support Measures for Enterprises Affected by E-commerce Payment Delays
- The Financial Services Commission held a meeting with the Ministry of SMEs and Startups (MSS), related organizations, and financial industry associations on July 29 to seek close cooperation from the financial industry to help minimize the damage caused by recent payment delays from e-commerce platforms (TMON and WeMakePrice). First, the FSC and the MSS requested that maturity extension and payment deferment on existing loans to be made available to the vendors affected by payment delays. In this regard, all financial sectors and policy financial institutions agreed to provide up to one year of maturity extension and payment deferment on their existing loans. Maturity extension will also be provided to vendors on existing e-commerce seller loans to ensure that they face no risk of credit downgrading. Second, the FSC plans to make available emergency funds worth KRW300 billion-plus in the form of guaranteed loans offered by Korea Credit Guarantee Fund and Industrial Bank of Korea (IBK) to facilitate low interest financing of SMEs temporarily having liquidity problems due to payment delays. Specific details of the guaranteed loan support program will be determined for announcement in coming days. Third, the MSS plans to provide policy financing support worth about KRW200 billion to assist small merchants and SMEs affected by payment delays. Fourth, the Ministry of culture, Sports and Tourism will operate an interest rate support program (2.5 to 3.0%p) in the amount of about KRW60 billion to help tourism businesses. The government, related organizations, and industry groups will operate an emergency response team to make sure that the financial support programs are effectively operated and the affected businesses can get support through proper channels. * Please refer to the attached PDF for details.
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Jul 25, 2024
- 2024 Korea Fintech Week to Kick Off on August 27
- The Financial Services Commission announced that this years global fintech expo, 2024 Korea Fintech Week, is scheduled to kick off on August 27 with major fintech businesses, financial companies, related organizations, academic institutions, and foreign governments and organizations participating at Dongdaemun Design Plaza (DDP) in Seoul. This years global fintech expo, the largest ever in scale, will be held for three days between August 27 and 29 under the theme of Beyond Boundaries: Fintech and AI Redefining Finance, providing visitors and participants with opportunities to share global trends on artificial intelligence (AI) and fintech innovation and gain insights on financial industrys future ecosystem. After an opening ceremony, there will be a policy information session provided by the FSC on Koreas fintech policy direction for this year and an on-site QA session with officials. Visitors will have chances to participate in eleven different seminars throughout three days, dealing with topics, such as AI and fintech, fintech investment strategy, ESG, and so on, with specific focus on AI technologies and their application. In addition, there will be ample opportunities to attract investments through investor relations (IR) and reverse IR events, which will help to promote investments for fintech firms to scale up or expand their businesses overseas. There will be a total of 85 exhibition booths organized into four different exhibition hallsfintech hall, financial hall, cooperating organization hall, and global hallshowcasing latest fintech services embracing AI technologies. During the three-day period, various consulting and networking programs will also be made available for fintech startups, entrepreneurs, and young adults seeking career opportunities in fintech. Visitors can attend and tour at free of charge. For more information please visit official expo website (https://2024.fintechweek.or.kr/). * Please refer to the attached PDF for details.
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Jul 22, 2024
- Vice Chairman Visits London to Promote Capital Market Reform Programs and Strengthen Bilateral Cooperation
- Vice Chairman Kim Soyoung of the Financial Services Commission visited London, the United Kingdom (UK) from July 16 to 19 in an effort to promote Koreas capital market reform and corporate value-up programs to global investors and to strengthen financial cooperation between Korea and the UK. IR with Global Investors On July 17, Vice Chairman Kim held an investor relations event for global investors and provided key information about the progress of Koreas capital market reform initiatives aimed at boosting market accessibility, guaranteeing fairness and transparency in market transactions, and enhancing shareholder values. In this regard, Vice Chairman Kim provided detailed information about the opening up of the foreign exchange (FX) market, plans to introduce an alternative trading system (ATS), short sale reform measures, and the corporate value-up program. UK-Korea Financial Forum On July 17, Vice Chairman Kim also attended the UK-Korea Financial Forum and delivered a congratulatory speech. In his remarks, Vice Chairman Kim talked about the importance of maintaining strong cooperation with the UK to effectively respond to various challenges and opportunities presented by shifting global market environment, such as technological advance and climate change. Meeting with Lord Mayor of the City of London On July 18, Vice Chairman Kim held a meeting with Lord Mayor Michael Mainelli of the City of London and exchanged views on key issues surrounding major elections around the world this year and policies to promote global financial hubs in both countries. At the meeting, Vice Chairman Kim took time to explain Koreas key financial policies, such as open banking, establishing a loan transfer infrastructure to facilitate refinancing of personal loans at lower interest rates, introducing financial MyData service, adopting guidelines on ESG disclosure, and so on. Meeting with FTSE Russell Following the meeting with the Lord Mayor of the City of London, Vice Chairman Kim vi
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Jul 17, 2024
- The Act on the Protection of Virtual Asset Users to Take Effect from July 19
- The Financial Services Commission announced that the Act on the Protection of Virtual Asset Users, which intends to establish a sound order in the virtual asset market and ensure protection for users, will take effect from July 19. Background In March 2021, the Act on Reporting and Using Specified Financial Transaction Information was revised to introduce a requirement under which virtual asset service providers (VASPs) were mandated to register with the financial authority. In addition, various types of regulatory mechanisms, such as travel rule, that are aimed at preventing money laundering were established. However, it was continuously pointed out that the regulatory framework centered on anti-money laundering was not adequate for authorities to actively respond to various types of unfair trading activities, such as price manipulation, and for guaranteeing safe protection of users assets. Considering the importance and urgency of providing safe protection for users, the Virtual Asset User Protection Act was enacted on July 18, 2023, reflecting key provisions proposed under 19 legislative bills that were pending at the National Assembly. For about one year since then, subordinate regulations have been drawn up, and VASPs were given the time needed to prepare for the implementation of the Virtual Asset User Protection Act from July 19, 2024. Key Provisions of the Virtual Asset User Protection Act This Act contains provisions (a) protecting users deposits and virtual assets, (b) regulating unfair trading activities, such as price manipulation, (c) authorizing the financial regulators to supervise, inspect, and sanction VASPs, and to investigate and take appropriate actions against those engaging in unfair trading activities. First, customers deposits should be safely kept at banks, and VASPs need to pay fees to their customers as interest payments on their deposits. VASPs should keep users virtual assets separate from their own virtual assets, and need to actually h
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Jul 11, 2024
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Jul 10, 2024
- FSC Announces Designation of Seven Non-holding Financial Groups for 2024
- The Financial Services Commission held the 13th regular meeting on July 10 and designated seven non-holding financial groups for 2024 pursuant to the Act on the Supervision of Financial Conglomerates (the Act hereinafter). The designated entities are Samsung, Hanwha, Mirae Asset, Kyobo, Hyundai Motor, DB and Daou Kiwoom groups. The designation and supervisory system on non-holding financial groups aims to effectively oversee and manage risk contagion or concentration in financial groups. With the implementation of the Act from June 2021, the FSC has been designating non-holding financial groups every year. The seven selected entities this year satisfied all designation criteria under the Act. The selected entities will be subject to the following rules. a) Select a financial business entity representing the entire group after considering the investment relationship, total size of asset, capital, and so on, and report their selection to the Financial Supervisory Service. b) Periodically inspect and evaluate group-wide risks and prepare and follow their own internal control and risk management policy, and transparently disclose material information needed to ensure consumer protection and report to the authorities. c) Draw up capital adequacy ratio reflecting risk-weighted capital based on the risk assessment conducted by the financial authorities. d) The financial authorities will carry out a periodic assessment (every three years) on the risk and risk management status of non-holding financial groups. It is expect that the designation of non-holding financial groups will help them to more effectively monitor and manage group-wide risks on their own. * Please refer to the attached PDF for details.
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Jul 10, 2024
- FSC Identifies D-SIBs and D-SIFIs for 2025
- The Financial Services Commission identified five bank holding companies (BHCs) and five banks as domestic systemically important banks (D-SIBs) and domestic systemically important financial institutions (D-SIFIs) for 2025 on July 10. Those selected for 2025 are same as the previous years list of selectionShinhan Financial Group, KB Financial Group, Hana Financial Group, Woori Financial Group, NH Financial Group, KB Kookmin Bank, Shinhan Bank, Woori Bank, KEB Hana Bank and NH Bank. Those identified as D-SIBs are required to set aside an additional common equity capital of 1.0 percent. The FSC identifies D-SIBs every year in accordance with assessment criteria recommended by the Basel Committee on Banking Supervision (BCBS). Meanwhile, the FSC also identifies D-SIBs as domestic systemically important financial institutions (D-SIFIs) under the amended Act on the Structural Improvement of the Financial Industry. D-SIFIs are required to prepare and submit their own recovery plans to the Financial Supervisory Service (FSS) within three months from the day of being designated as a D-SIFI. Since the D-SIBs selected for 2025 are the same as the previous year, there will be no actual increase in capital ratio required from them. * Please refer to the attached PDF for details.
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Jul 10, 2024
- Household Loans, June 2024
- In June 2024, the outstanding balance of household loans across all financial sectors rose KRW4.4 trillion (preliminary), growing at a slower rate compared with the previous month (up KRW5.3 trillion). In the first half of 2024, household loans rose KRW7.9 trillion (up 0.5 percent), showing a stable trend of growth compared with the end of 2023. * Change (in trillion KRW, m-o-m): +0.9 (Jan 2024), -1.9 (Feb), -4.9 (Mar), +4.1 (Apr), +5.3 (May), +4.4 (Jun)p (By Type) Home-backed mortgage loans rose KRW6.1 trillion, growing at a slightly faster rate compared with the previous month (up KRW5.6 trillion), as the banking sector continued to see expansion of mortgage loans (up KRW5.7 trillion up KRW6.3 trillion). Other types of loans declined KRW1.7 trillion as the banking sector saw a drop of KRW0.3 trillion from the growth of KRW0.3 trillion a month ago and the nonbanking sector saw an expanded level of drop from a month ago (down KRW0.5 trillion down KRW1.4 trillion). (By Sector) Household loans grew at a similar level in the banking sector but fell at a faster rate in the nonbanking sector. In June, banks saw a rise of KRW.6.0 trillion in household loans, which showed a similar level of pace from the previous month (up KRW6.0 trillion), as mortgage loans went up at a faster rate (up KRW5.7 trillion up KRW6.3 trillion) with increased demand for policy mortgage loans and recovery in housing transactions. Other types of loans turned lower slightly compared with the previous month (up KRW0.3 trillion down KRW0.3 trillion). In the nonbanking sector, household loans fell at a faster rate (down KRW0.7 trillion down KRW1.6 trillion) due to the quarterly write-off of nonperforming loans. Mutual finance businesses (down KRW1.0 trillion), specialized credit finance companies (down KRW0.3 trillion), and savings banks (down KRW0.3 trillion) saw declines, while insurance companies saw a slight rise (up KRW0.02 trillion). (Assessment) The financial authorities assessed that the growt
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Jul 09, 2024
- Insider Transactions of Listed Companies Subject to the Prior Disclosure Requirement from July 24
- The Financial Services Commission announced that regulatory changes, which require insider transactions of listed companies to be disclosed 30 days prior to their planned transaction dates, have been approved by the government at a cabinet meeting held on July 9. The revision proposal for the Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSCMA) and its subordinate regulations will go into effect from July 24. The rule changes being introduced specify (a) the entities that will be exempted from the prior disclosure duty, (b) the volume and type of transactions exempted from the disclosure duty, (c) details regarding the procedure and method of disclosure, (d) specific reasons or cases where insider transactions plan can be withdrawn, and (e) a clearer method for calculating penalty surcharges that can be imposed on rule-breakers. First, the rule changes being introduced exempt pension funds and other financial investors that are expected to have higher levels of internal control standards and are unlikely to misuse material nonpublic informationsuch as collective investment vehicles, banks, insurance companies, specialized credit finance companies, financial investment businesses, venture capital firms, and the Korea SMEs and Startups Agencyfrom the duty to disclose their stock transaction plans in advance for insider transactions. Moreover, an exemption from the prior disclosure duty will also be granted to foreign investors that are deemed to have an equivalent status to the above mentioned domestic financial investors to ensure more equal treatment of both domestic and foreign investors. Second, the rule changes being introduced grant an exemption if the volume of transactions in particular securities typesover the past six months is less than one percent of the total number of shares issued by the company within that particular year and if the total amount of transactions is less than KRW5 billion. Moreover, an exemption from th
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Jul 08, 2024
- FSC Vice Chairman Speaks about Megatrends and Policy Framework at Future Finance Seminar
- Vice Chairman Kim Soyoung of the Financial Services Commission attended a policy seminar on future finance hosted by Korea Institute of Finance and sponsored by the FSC on July 8. Todays seminar was held under the theme of future megatrends and impending changes in the financial sector, which brought together public and private sector experts with diverse backgrounds, to have discussions on the impact of rapidly changing demographic structure, climate change, and technological advance on the financial market and ways to effectively cope with these changes. At the beginning of the seminar, Vice Chairman Kim delivered a keynote address on the topic of megatrends and policy framework for future finance, in which he emphasized the need for the financial industry and the government to prepare measures to secure sustainable ways to grow in a preemptive manner. The following is a summary of Vice Chairman Kims remarks. Against the backdrop of rapidly changing financial environments and market conditions, the authorities have been thus far mostly focused on responding to issues that needed to be addressed urgently. However, since financial policy can have a significant impact on the structural and macro-level changes, it is important that the authorities set their sight on a medium- to long-term horizon when formulating policy responses. In this regard, the authorities are working on policy frameworks for future finance, based on systematic analyses intended to minimize risks and seek opportunities for growth over a medium- to long-run. The taskforce on future finance organized into three sub-groupsdemographic shift, climate change, and technological advancehave been examining both challenges and opportunities in their respective areas, while seeking policy measures with three specific aimsmitigation, adaptation, and innovation. The mitigation policy is aimed at reducing the impact of impending change and shock, while slowing the pace of their occurrence. The adaptation poli
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Jul 04, 2024
- Policy Finance Support Worth KRW3.5 Trillion Planned to Promote AI Development
- The Financial Services Commission held the seventh consultative body meeting on policy finance support with related government ministries and policy financial institutions on July 4. The consultative body on policy finance support was launched at the end of 2022 to more effectively align the supply of policy finance support to national industrial strategies. At the third meeting held in June last year, authorities discussed the creation of the KRW300 billion fund to foster growth of the semiconductor ecosystem, and in December of the same year, authorities introduced plans to provide policy finance support worth KRW102 trillion-plus to the five key strategic industries. As such, major government decisions regarding the supply of policy finance support are being handled and discussed through consultative body meetings. At todays meeting, FSC Vice Chairman Kim Soyoung delivered opening remarks where he discussed the importance of promptly identifying demands for funding on the ground and effectively matching them with the supply of policy finance support. Vice Chairman Kim said that the launching of the semiconductor ecosystem fund in the size of KRW300 billion last year helped to facilitate an expansion of the support program this year to up to KRW1.1 trillion-plus with input from governments fiscal expenditure. In this regard, the semiconductor ecosystem funds launch last year provides a good example where policy financial institutions and related ministries were able to preemptively and effectively respond to the demands on the field. Thus, Vice Chairman Kim urged authorities to continue to closely coordinate to effectively supply policy finance support to propel development of future growth sectors. Supply of Policy Finance Support as of May 2024 Until the end of May 2024, policy financial institutionsKorea Development Bank, Industrial Bank of Korea, and Korea Credit Guarantee Fundsupplied a total of KRW54.5 trillion to the five key strategic sectors. This marks a
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Jul 03, 2024
- SFC Imposes Penalty Surcharges on Global Investment Banks for Violating Short Sale Regulations
- The Securities and Futures Commission, a sub-commission within the Financial Services Commission responsible for overseeing the securities and futures markets, held the thirteenth regular meeting on July 3 and decided to impose penalty surcharges amounting to KRW27.173 billion in total on two former Credit Suisse affiliated investment banks for violating short sale regulations under the Financial Investment Services and Capital Markets Act (FSCMA). The level of penalty surcharge imposed on each of the two former Credit Suisse affiliated entities is the largest (KRW16.94 billion on Credit Suisse AG) and the third largest (KRW10.23 billion on Credit Suisse Singapore Ltd.) ever since the penalty surcharge system began to be implemented on naked short sale activities in April 2021. In the case of Credit Suisse AG (currently UBS AG), from April 7, 2021 to June 9, 2022, the investment bank was found to have engaged in naked short sales in the amount of about KRW60.33 billion (162,365 shares on 20 stock items) without possessing these stocks at the time of placing short sale orders. In the case of Credit Suisse Singapore Ltd., from November 29, 2021 to June 9, 2022, the investment bank was found to have engaged in naked short sales in the amount of about KRW35.28 billion (401,195 shares on five stock items) without possessing these stocks at the time of placing short sale orders. In addition, prior to todays meeting, the SFC decided to impose administrative fines worth KRW284.2 million in total on four domestic financial investment businesses, two foreign financial investment businesses, and an individual investor for violating their net short position balance reporting and disclosure duties under the FSCMA. The financial authorities will continue to strictly deal with naked short selling and other unfair trading activities in capital market to promote soundness in market transactions. * Please refer to the attached PDF for details.
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Jun 27, 2024
- PF Lending Institutions' Consortium Agreement Revised to Seek Soft-landing in Real Estate PF Market
- The Financial Services Commission announced that the project finance lending institutions consortium agreement for all financial sectorsincluding eleven industry associations and national federations and seven related organizationshas been revised as part of the broader plan to seek an orderly soft-landing in the real estate project finance market on June 27. In order to more effectively control lenders from granting maturity extension and deferment of interest payments to the development projects that fail to meet the viability test in a repeated and indiscriminate manner, the project finance lending institutions consortium agreement is being updated to strengthen requirements on the provision of maturity extension and deferment of interest payment. First, when extending maturity for the second time or more, a viability assessment performed by a third-party expert (accounting firm, credit rating agency, etc.) and consent from three-fourths (two-thirds previously) of the lending institutions will be required. When seeking for maturity extension after having a viability assessment performed, there will be an ample period granted to ensure sufficient time for the viability assessment and developers business plan. Second, deferment of interest payments will be allowed only when late interest payments have been repaid in principle. However, when 50 percent or more of late interest payments have been repaid and a schedule for making further payments on the remaining balance is being presented, lenders will consider these factors when making decisions on whether to grant deferment of interest payments. Third, when maturity extension and deferment of interest payments take place, details including their deliberation documents should be submitted to the secretariat of the project finance lending institutions consortium without any delay to ensure effective monitoring of the situation concerning the restructuring or liquidation of unviable projects. The revised consortium ag
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Jun 25, 2024
- New Enforcement Decree on the Protection of Virtual Asset Users Approved by the Government
- The Financial Services Commission announced that the government approved a new legislative bill on the Enforcement Decree of the Act on the Protection of Virtual Asset Users at a cabinet meeting held on June 25. The Enforcement Decree will go into effect on the same day as the Act on the Protection of Virtual Asset Users (the Act hereinafter) on July 19. The Act was enacted on July 18, 2023 with aims to protect virtual asset users and establish a sound order in the virtual asset market. The Act provides definitions on virtual assets and those that are excluded from the scope of virtual assets. The Act mandates virtual asset service providers (VASPs) to safely keep and manage users deposits and virtual assets. The Act also establishes legal grounds to impose penalties and sanctions on unfair trading activities, such as the use of material nonpublic information and price manipulation. In this regard, the Enforcement Decree to the Act approved by the Government today prescribes specific procedures and methods delegated by the Act as follows. Key Details Definition and Formation of an Advisory Committee (Articles 2 to 7) Virtual assets are defined as electronic tokens with economic value, which can be traded or transferred electronically. Electronic tokens that are regulated by another legislation or are deemed to pose no harm to users, such as game money, electronic money, electronic stocks, and central bank digital currency (CBDC) are excluded from the scope of virtual assets. Electronic bonds, mobile gift certificates, deposit tokens linked to the CBDC network, and non-fungible tokens (NFTs) are also added to the listed of excluded tokens. The FSC will organize an advisory committee on virtual assets to seek consultation on related policies and regulations. The committee will be made up of representatives of relevant government ministries and experts from the private sector, and will be chaired by Vice Chair of the FSC. Management of User Deposits (Articles 8 to 10)
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Jun 25, 2024
- FSC Announces Plans for Implementing Stressed Debt Service Ratio Rules in H2 2024
- The Financial Services Commission announced its plan to implement the second phase of stressed debt service ratio (DSR) rules from September 1, 2024, a postponement of two months from the initial plan. Considering that government-wide support measures intended to alleviate the challenges and difficulties of lower income households and self-employed business owners are currently being drawn up and the fact that the viability assessment for the real estate development sites under project finance loans will start from the end of June, the decision to postpone the application of the second phase stressed DSR rules is aimed at facilitating a soft-landing of the stressed DSR regulation in the market. The stressed DSR regulation imposes a certain level of additional stress rate when calculating a borrowers DSR as it takes into account the possibility of the borrower facing heavier repayment burdens in the future with increases in interest rates. Key details of the second phase stressed DSR rules, effective from September 1, 2024, are as follows. First, the additional stress rate of 0.75 percent will be applied, which will be at a 50 percent level of the base stress rate (1.5 percent), an increase from the current level of 25 percent. Second, credit loans from the banking sector and home-backed mortgage loans from the nonbanking sector will be subject to the stressed DSR limits. However, for credit loans, calculation of DSR with the additional stress rate will only take place for borrowers when the balance of credit loans exceeds KRW100 million. Third, when applying individual DSR limits, the maximum loan limits are expected to decrease by about 3 to 9 percent for mortgage loans from banks and nonbanks, depending the type of interest structures (variable, mixed, or periodically changing), and by 1 to 2 percent for credit loans from banks, depending on the type of interest structure and maturity. However, considering that the proportion of borrowers whose maximum loan limits
