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Jul 12, 2023
- Household Loans, June 2023
- The outstanding balance of household loans across all financial sectors went up KRW3.5 trillion in June 2023 (preliminary), rising for the third consecutive month. Compared to the same month last year, household loans fell 1.2 percent. * Change (in trillion KRW): -3.4 (Dec 2022), -8.1 (Jan 2023), -5.1 (Feb), -5.1 (Mar), +0.2 (Apr), +2.8 (May), +3.5 (Jun) (By Type) Home-backed mortgage loans edged up for four months in a row but other types of loans declined at a faster pace in June. Mortgage loans rose KRW6.4 trillion, with a drop of KRW0.6 trillion in the nonbanking sector and an increase of KRW7.0 trillion in the banking sector. Other types of loans fell KRW2.9 trillion as both banks and nonbanks saw drops of KRW1.1 trillion and KRW1.8 trillion, respectively. (By Sector) Household loans rose in the banking sector but declined in the nonbanking sector. Banks saw a rise of KRW5.9 trillion of household loans in June, which went up for the third straight month. Home mortgage loans went up KRW7.0 trillion in the banking sector as individual mortgage loans (up KRW3.7 trillion), policy mortgage loans (up KRW2.6 trillion), jeonse loans (up KRW0.1 trillion) and group lending for new apartment subscription (up KRW0.7 trillion) all increased. Other types of loans fell KRW1.1 trillion due to a drop in credit loans (down KRW0.9 trillion). The growth of mortgage loans in the banking sector seems to be caused by rising supply of special Bogeumjari Loan for non-speculative homebuyers and housing transactions rebounding in certain areas. However, as the volume of housing transactions is yet to bounce back to the level seen in previous years and with a significant number of mortgage borrowers taking out loans to return jeonse deposit money or for living expenses, the current pace of growth in home mortgage loans is not at an alarming level as to cause overheated speculation in the housing market. Nonbanks saw a drop of KRW2.4 trillion in household loans with a slight increase in th
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Jul 06, 2023
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Jul 05, 2023
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Jul 05, 2023
- FSC Identifies D-SIBs and D-SIFIs for 2024
- The Financial Services Commission identified five bank holding companies (BHCs) and five banks as domestic systemically important banks (D-SIBs) for 2024 on July 5: KB Financial Group, Shinhan 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%, and the higher loss absorbency requirement will take effect on January 1, 2024. 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. * Please refer to the attached file for details.
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Jul 05, 2023
- Financial Authorities to Promote Fair and Effective Competition in Banking Sector
- The Financial Services Commission and the Financial Supervisory Service held a meeting with bank holding companies on July 5 and announced a set of measures intended to promote competition in the banking sector. The measures have been prepared after holding a series of taskforce meetings on improving the management and operating practices of banks since February this year. The key banking sector reform areas include (a) promoting competition and overhauling the industrial structure, (b) improving the interest rate system through expanded availability of fixed interest rates, (c) enhancing loss absorbing capacity, (d) increasing the proportion of non-interest revenues, (e) improving the employee remuneration system and the shareholder return policy and (f) promoting corporate social responsibility. At the beginning of the meeting, FSC Chairman Kim Joo-hyun delivered opening remarks emphasizing the need to promote fair and effective competition in the banking sector. The following is a summary of Chairman Kims remarks. Over the past four months since the end of February, the FSC and the FSS have been preparing reform measures together with private sector experts, financial industry officials and research institutions on the six key task items concerning how to improve the management and operating practices of banks. Due to the oligopolistic nature of the banking industry, there has been a widely held view among the public that banks are reluctant to make changes despite their easy profitmaking structure. Therefore, the main purpose of the reform measures prepared by the taskforce is to promote fair and effective competition in the banking sectorbut more importantly, competition driven by market forces. Authorities will work to bring about fair competition by requiring banks to provide adequate information about their business operation and products to the market so that consumers can make inform decisions. The purpose of creating an online loan transfer system introdu
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Jun 30, 2023
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Jun 30, 2023
- Government to Ensure Virtual Asset User Protection, Transaction Transparency and Market Discipline
- The Financial Services Commission announced that the Act on the Protection of Virtual Asset Users (the Act hereinafter) was passed at the National Assemblys plenary session on June 30. The newly established law on virtual assets is aimed at guaranteeing protection of assets held by virtual asset users, regulating unfair transaction activities in the virtual asset market and conferring the market oversight and sanctions authority to the FSC. Virtual asset service providers have been regulated under the revised Act on Reporting and Using Specified Financial Transaction Information since March 2021. However, the current regulatory framework had limits where authorities are not able to actively respond to various types of unfair transaction activities, prevent damages incurred to the users of virtual assets and more effectively supervise and sanction VASPs and assist victims with relief measures. Since the onset of this administration, the government has put forward establishing the infrastructure and regulatory framework on digital assets as a key policy agenda and has been supporting the relevant legislative process at the National Assembly. In August 2022, a private-public joint taskforce on digital assets was launched which established the following principles on the direction of creating a virtual asset regulatory framework(a) working on a gradual and phase-by-phase introduction of regulations, (b) applying same regulations on the same service and same risk and (c) ensuring global regulatory consistency with major economies and international organizations. On April 25 this year, given the urgency of protecting virtual asset users, the legislative subcommittee of the National Policy Committee at the National Assembly decided to go ahead with an enactment of the least necessary regulatory measures. Then, a legislative bill integrating nineteen previously pending bills was prepared and passed at the plenary session of the National Assembly on June 30. First, the Act e
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Jun 27, 2023
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Jun 26, 2023
- KRW300 Billion Fund to be Newly Created to Enhance Competitiveness of Semiconductor Industry
- FSC Vice Chairman Kim So-young held the 3rd consultative body meeting on policy finance support with the relevant government ministries and policy financial institutions on June 26. At the meeting, authorities checked the progress of funding supply to five major strategic sectors between January and May this year and discussed offering a preferential funding supply process for outstanding businesses in each industrial sector. Between January and May 2023, policy financial institutions such as the Korea Development Bank, the Industrial Bank of Korea and the Korea Credit Guarantee Fund supplied a total of KRW46.3 trillion in funding support to the five major strategic industrial sectors, which amounted to about 50.5 percent of the total of KRW91 trillion targeted for the whole year. At the meeting, authorities also discussed ways to select outstanding businesses in each industrial sector in order to more effectively provide targeted funding support for businesses that fit the direction of the governments industrial policy strategies. In this regard, a comprehensive checklist has been prepared for selecting outstanding businesses and the checklist-qualified enterprises will be eligible to receive the benefit of a fast-tracked credit evaluation process. After having an inter-ministerial consultation process, authorities have already prepared a checklist on eleven industrial sectorsfor now and plan to review whether to expand the eligibility to additional industrial sectors in the future when drawing up a policy finance support plan for 2024. Prior to todays meeting, Vice Chairman Kim and First Vice Minister of the Ministry of Trade, Industry and Energy Jang Youngjin held an agreement ceremony to launch a KRW300 billion worth of fund intended to make targeted investments in the domestic semiconductor ecosystem along with key chip makers and policy financial institutions. The newly created fund will invest in semiconductor materials, parts and equipment manufacturing busi
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Jun 22, 2023
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Jun 21, 2023
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Jun 21, 2023
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Jun 20, 2023
- Government to Provide Active Support to Facilitate Innovative Tech Companies to Raise Funds
- The Financial Services Commission announced on June 20 that the government will make all out efforts to facilitate innovative tech companies to raise funds through capital markets. To this end, the government plans to make changes to tech companies special listing rules and facilitate fundraising through MAs (mergers and acquisitions) and venture capital investment. First, in an inter-ministerial collaborative effort, the government plans to go on a series of roadshow in search for deep tech businesses to help cultivate their growth and listing on the stock exchange for about a month starting from June 21. Also, authorities will revamp the special listing system for tech companies and announce the improvement measures in July. Since 2005, the Korea Exchange has been operating various special KOSDAQ listing tracks for technologically innovative businesses or those with growth potential even when they are making no profit or have no sales record. So far, 184 companies made the listing on KOSDAQ through special listing tracks but still there are many startups and SMEs that are unaware of their eligibility or that lack relevant information. Thus, a month-long tech special listing roadshow will provide opportunities for tech companies to get information about the listing procedure and necessary preparatory work. Second, the FSC, the FSS and the KRX will set up a taskforce with relevant government ministries and other research and industry organizations with an aim to draw up measures to improve the rules and operation of special listing tracks for tech companies. The taskforce will look into the problem of having to go through a time-consuming and costly tech evaluation process for tech companies. Despite growing significance of open innovation where a startup company and a mid-sized company can make joint investment, the current regulations are restrictive for promising tech startups to scale up and commercialize their technology due to certain restrictions in the tech
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Jun 20, 2023
- Authorities Review Market Situation and Discuss Rollback of Eased Regulatory Measures
- The Financial Services Commission held a meeting with the Financial Supervisory Service, the Bank of Korea and financial industry associations on June 20 to check current market situation and discuss the progress of market stabilization measures and the operation of eased financial regulations. With financial market conditions stabilizing, demand for market stabilization programs remains not so high currently. However, to be prepared for uncertainties at home and abroad, authorities already made an agreement on continuing to make the PF-ABCP (project finance asset backed commercial paper) purchase program available until the end of February 2024 for PF-ABCPs guaranteed by securities firms.Market stabilization programs including the bond market stabilization fund and the corporate bond and CP purchase program currently have KRW35 trillion in their remaining capacity, which provides an ample room to respond in the future in the case of market instability. In addition, authorities are closely monitoring the real estate PF market and taking necessary steps to help normalize the projects considered to be facing the risk of default. In this regard, the real estate PF lending institutions consortium agreement was activated to ensure an orderly normalization of at-risk projects. Regarding the temporary easing of regulations applied on banks, insurers, savings banks, specialized credit finance businesses and financial investment businesses since after October of last year and extended partially in March 2023, participants evaluated that financial institutions are currently capable of responding to risks without the support made available by additional extension. However, to be prepared for potential expansion of uncertainties in the future, participants agreed on extending the availability of eased regulations for certain areas. As such, the eased regulations on banks loan-to-deposit ratio, credit offering limit between subsidiaries of a financial holding company and insuran
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Jun 19, 2023
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Jun 15, 2023
- FSC Holds Financial Cooperation Forum with Thailand and Attends IOSCO Annual Meeting
- The Financial Services Commission held the Korea-Thailand Financial Cooperation Forum and attended the 48th annual meeting of the International Organization of Securities Commission (IOSCO) held in Bangkok, Thailand on June 12-15. Korea-Thailand Financial Cooperation Forum The FSC held the Korea-Thailand Financial Cooperation Forum with the Bank of Thailand and the Council on International Financial Cooperation on June 13. The forum was attended by about a hundred regulatory authorities and relevant officials from both countries, and the participants held discussions on (a) the current status of financial markets and banking industry in both countries and (b) ways to increase bilateral cooperation on financial innovation and development. At the forum, Securities and Futures Commission (SFC) Standing Commissioner Kim Jeong-kag of the FSC delivered congratulatory remarks and talked about the importance of bilateral cooperation between the two countries. In his speech, Standing Commissioner Kim said that Koreas experience with online-only banks, open banking and financial MyData services can offer valuable examples regarding digital transformation of the financial sector and that Korean financial institutions are very much willing to participate and contribute to Thailands virtual banking initiative. IOSCO Annual Meeting The FSC and the FSS attended the 48th IOSCO annual meeting held on June 12-15. At this years meeting, the member countries held discussions on various capital market issues such as sustainable finance, managing fund liquidity risks, private equity financing, leveraged loans and collateralized loan obligations (CLOs). Regarding the issue of the IOSCO Board officially endorsing the sustainability disclosure standards prepared by the International Sustainability Standards Board (ISSB), the Korean delegation agreed with the suggestion for endorsement in principle but added that due to different regulatory and industry preparation in each member country, th
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Jun 12, 2023
- FSC Plans to Improve Accounting Rules to Enhance Transparency and Stability
- The Financial Services Commission announced a plan to make improvements to a set of key accounting rules on June 12, taking into account a comprehensive set of factors discussed and recommended by academic and industry experts. Since the accounting reform of 2017 (regarding the Act on External Audit of Stock Companies), there have been both positive and negative opinions in the past five years about the newly introduced accounting rules such as the periodic designation of an external auditor. Compared to the pre-reform period, experts generally see that the reform measures have helped to improve accounting transparency. However, businesses have called for making improvements to the system as they have been questioning whether the benefit outweighs the cost in introducing the reform measures. Against this backdrop, the FSC hasprepared the following measures to improve the accounting rules introduced five years ago. Lowering burden of external audit on internal accounting control system The cost of stock companies for setting up and maintaining an internal accounting control system is estimated to be about 90 percent of the cost paid out for audit fees. This sharp rise in their accounting costs has presented difficulties for many businesses. Meanwhile, a study by Korea Accounting Association finds that for stock companies with less than KRW2 trillion in assets, the relationship between the effectiveness of having a separate internal accounting control system and boosting their accounting transparency remains not so clear. Thus, authorities will postpone the requirement of external audit on the consolidated internal accounting control system for small- and medium-sized stock companies (those with assets less than KRW2 trillion) for five years (from 2024 to 2029). For those with assets worth KRW2 trillion or more, the external audit requirement will be implemented as scheduled starting from this year, but those asking for a postponement on their consolidated internal ac
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Jun 12, 2023
- 2023 Korea Fintech Week Scheduled to be Held from August 30 to September 1
- The annual global fintech expo, 2023 Korea Fintech Week, is scheduled to be held from Wednesday, August 30 to Friday, September 1 at Dongdaemun Design Plaza (DDP) in Seoul this year. The 2023 Korea Fintech Week will be held on the theme of the new wave of fintech, providing a venue for fintech businesses, financial companies, big tech platforms and investors to come together to share some of the latest fintech trends, pitch innovative business models and promote investment in the fintech industry. A variety of programs including fintech exhibitions, theme-based seminars and events for first-hand fintech experience will be available for participants. In order to actively support domestic fintech firms business expansion in overseas markets, this years Korea Fintech Week will have an expanded size of global hall to promote participation by many investors, accelerators and venture capitalists from many different countries. In addition, a collaboration hall will be newly set up for operation this year to encourage participation by the entire domestic fintech ecosystem including local government bodies, relevant organizations and universities. Also, a variety of helpful programs and events including a global fintech talk with a foreign influencer, fintech idea contest, finance-themed musical and fintech job mentoring and career consulting will be available to help visitors to learn about various fintech services and trends in an easy and fun way. It is expected that the 2023 Korea Fintech Week will provide vast opportunities to expand and reinvigorate Koreas fintech ecosystem. * Please refer to the attached filefor details.
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Jun 09, 2023
- Household Loans, May 2023
- The outstanding balance of household loans (preliminary) across all financial sectors went up KRW2.8 trillion in May 2023, which rose for the second consecutive month. Financial authorities will closely monitor trends in household debt and work to ensure stable management of household loans. (Overall) Household loans across all financial sectors rose KRW2.8 trillion in May 2023, but the year-on-year growth rate edged down 1.4 percent, showing a continuous trend of declining balance on year since November 2021. (By Type) Mortgage loans grew at a faster pace for the third consecutive month and other types of loans declined at a slower rate for three month in a row. Mortgage loans went up KRW3.6 trillion, despite a decline of KRW0.6 trillion in the nonbanking sector, as banks saw an increase of KRW4.3 trillion. Other types of loans fell KRW0.8 trillion as both the banking and nonbanking sectors saw a drop of KRW0.02 trillion and KRW0.8 trillion each. (By Sector) Household loans rose in the banking sector but fell in the nonbanking sector. Household loans in the banking sector increased KRW4.2 trillion in May, edging up for the second straight month. Mortgage loans from banks grew KRW4.3 trillion, despite a drop in jeonse loans (down KRW0.6 trillion), as the volume of policy mortgage loans (up KRW2.8 trillion), general individual mortgage loans (up KRW2.0 trillion) and group lending for new apartment subscription (up KRW0.1 trillion) increased. Other types of loans in the banking sector declined (down KRW0.02 trillion) at a slower pace compared to a month ago (down KRW0.5 trillion) as credit loans expanded from a fall in the previous month (down KRW0.6 trillionup KRW0.03 trillion). Nonbanks saw a drop of KRW1.4 trillion in household loans with slight increases in the insurance (up KRW0.4 trillion) and specialized credit finance (up KRW0.4 trillion) sectors but declines in mutual finance (down KRW2.2 trillion) and savings banks (down KRW0.03 trillion). The pace of declin
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Jun 08, 2023
- Authorities Hold 1st Meeting on Benchmark Rate and Short-term Money Market
- The Financial Services Commission held a meeting with the Bank of Korea, the Financial Supervisory Service and relevant industry groups and institutions to monitor how domestic financial institutions are preparing for a transition away from LIBOR (London interbank offered rate) and discuss issues surrounding the operation of domestic financial benchmark rates. In coordination with relevant institutions and financial companies, the government has been working to make a transition away from LIBOR, responding to the European Unions Benchmark Regulation (BMR) compliance and participating in the global benchmark rate reform efforts. The following is an overview of these efforts so far. First, all financial contracts based on non-USD LIBOR, which ceased to be published in 2022, were successfully converted, and financial contracts based on LIBOR, which will be discontinued from July 2023, are being converted to an alternative rate such as secured overnight financing rate (SOFR). As of the end of May 2023, about 95.3 percent of domestic financial institutions contracts have made this transition. Second, the government enacted the Act on the Management of Financial Benchmarks, which became effective in November 2020 and reflects international standards on benchmark rate reform, to strengthen credibility of domestic benchmark rates. In order to ensure a seamless utilization of domestic benchmark rates (Korea overnight financing repo rate and certificate of deposit rate) in the European Union, authorities have been working with EU counterparts to get an approval for congruity. Third, in February 2021, authorities selected the Korea Overnight Financing Repo Rate (KOFR) as Koreas new risk-free reference rate (RFR) and designated it as a critical benchmark rate under the Act on the Management of Financial Benchmarks. The KOFR is being published by the Korea Securities Depository (KSD) since November 2021. Currently, three-month KOFR futures and exchange traded funds (ETFs) have b
