Financial stability is a prerequisite to innovation and inclusive finance policies. FSC maintains close market monitoring for any signs of market volatility and works to ensure stability in the financial markets. There are risk factors originating from abroad and from within. FSC focuses on making our economy more resilient from external shocks, such as a disruption in the global supply chain, and supporting Korea’s material, component and equipment industries to help boost their global competitiveness. Internally, FSC is closely monitoring the trends in household debt and seeking reforms to corporate restructuring in order to prevent domestic risk factors from turning into systemic risks. Policies aimed at increasing financial stability also include enhancing fairness in the financial markets by introducing a comprehensive legal framework for the supervision of financial conglomerates, improving market discipline and promoting transparency in corporate disclosure and accounting practices.
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Jul 28, 2020
- FSC Issues Administrative Guidance on Private Equity Funds
- The FSC announced administrative guidance on July 28, which is aimed at strengthening the supervisory role of private equity fund sellers and trustees against fund management companies and providing specific guidelines to facilitate more systematic and effective self-inspection of private equity funds. (INVESTOR PROTECTION MEASURES) Fund sellers will be required to check details of investment information package as well as fund management, and will be required to suspend sales when redemption delays occur.Trustees will be required to check whether fund management companies are engaged in any unlawful or unfair sales practices.Cross trading of funds from the same entity and coercive sales practices will be prohibited.(SELF-INSPECTION) The guidance on self-inspection lays out specific requirements for fund sellers, managers, trustees and administrators. Site-inspection should be carried out through consultation and cooperation between fund sellers, managers, trustees and administrators, and the method of inspection should be determined through a consultative body.All private equity funds in operation as of May 31, 2020 will be subject to self-inspection. The self-inspection team will look into whether asset statements of administrators and trustees are in accordance with each other’s, whether assets do actually exist and the appropriateness of investment information, collective investment rules and fund management. Close cooperation is advised from participating institutions which will be subject to the rule of confidentiality.The administrative guidance is expected to go into effect on August 12. The FSC will work to improve the regulatory framework on private equity funds and make sure that inspections are carried out properly.* Please refer to the attached PDF for details.
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Jul 28, 2020
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Jul 23, 2020
- FSC Chairman Holds Talks with Heads of Financial Holding Groups
- FSC Chairman Eun Sung-soo held talks with heads of financial holding groups on July 23, and shared opinions about the recent issues surrounding the financial industry and expected changes in a post-pandemic era.At the meeting, Chairman Eun expressed appreciation for financial companies’ efforts in providing the government’s emergency financial support, which has earned recognition from both at home and abroad. As the COVID-19 pandemic continues to pose risks, Chairman Eun emphasized the need to stay alert for any negative ripple effects. In this regard, Chairman Eun urged cooperation from financial companies in ensuring a smooth implementation of the working capital support program for the suppliers in key industries, which will go into effect at the end of July. With regard to the scheduled expiration of loan maturity extension and deferment of interest payment at the end of September, Chairman Eun and the heads of financial holding groups agreed to continue to discuss the possibility of extension while closely monitoring market conditions in August.On the government’s new deal initiative, Chairman Eun emphasized the important role of the financial system in spreading and sharing risks and providing necessary funds to support innovative new deal projects. In particular, Chairman Eun noted the need to channel concentration of liquidity currently existing in the real estate market to more productive sectors.As big tech companies are entering the financial services industry, Chairman Eun said that there are positive effects from a consumers’ point of view, such as improved convenience and lowered costs, although there remain concerns about issues of fair competition and systemic risks. In this regard, Chairman Eun proposed the launching of a public-private joint consultative body composed of the government, traditional financial industry and big techs to facilitate discussion on win-win growth strategies.Chairman Eun also discussed the need for financial compa
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Jul 21, 2020
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Jul 17, 2020
- SPV to Start Purchasing Corporate Bonds and CP
- The government announced the official launching of the special purpose vehicle intended to support businesses facing liquidity problems by purchasing corporate bonds and CP on July 17.BACKGROUNDThe government, the Bank of Korea and the Korea Development Bank unveiled a joint plan for creating an SPV on May 20. Since then, the relevant institutions have worked toward the official launching of the SPV on July 14. In the meantime, the passage of the 3rd supplementary budget at the National Assembly enabled capital injection of KRW1 trillion to KDB. Between May 20 and July 13, the KDB purchased KRW300 billion worth of low-rated corporate bonds to help stabilize markets before the launching of the SPV. In addition, the Bank of Korea announced its decision to lend KRW8 trillion to the SPV on July 17.KEY DETAILS(SIZE) Up to KRW10 trillion made up of KRW1 trillion (10%) in equity capital from KDB, KRW1 trillion (10%) in subordinated loans from KDB and KRW8 trillion (80%) in primary loans from BOK, with the possibility of expanding the size up to KRW20 trillion(PERIOD) SPV’s bond purchasing program will be operated on a temporary basis for six months from July 14, 2020 until January 13, 2021, with the possibility of extension afterwards.(TARGETS) Investment grade corporate bonds and CP issued by nonfinancial companies with priorities given to low-rated companies (A~BBB ratings) and ‘fallen angels,’ BB-rated bonds downgraded from investment grades due to COVID-19-related factorsThe SPV is expected to help alleviate liquidity problems for many low-rated companies.* Please refer to the attached PDF for details.
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Jul 16, 2020
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Jul 15, 2020
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Jul 15, 2020
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Jul 14, 2020
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Jul 07, 2020
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Jul 02, 2020
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Jul 02, 2020
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Jun 30, 2020
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Jun 30, 2020
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Jun 29, 2020
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Jun 29, 2020
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Jun 24, 2020
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Jun 24, 2020
- FSC Changes Rules on Liquid Asset Requirements for Repo Transactions
- The FSC revised the regulations on financial investment business on June 24, laying out specific liquid asset requirements for the sellers of repurchase agreements.The FSC has been pursuing changes in regulations to improve the effectiveness and soundness of the repurchase agreement (repo) market. The revisions to the Enforcement Decree of the Financial Investment Services and Capital Markets Act in December last year introduced a legal basis to require repo sellers (borrowers) to hold liquid assets. The changes in regulations adopted today are a follow-up measure, establishing the specific scope of liquid assets as well as holding requirements.SCOPE OF LIQUID ASSETSLiquid assets include cash, savings accounts, certificates of deposit, liquid loan commitments, readily disposable deposits of securities companies, up to 30 percent of money market trust (MMT) and money market wrap (MMW), promissory notes, payment reserves of the Bank of Korea. Liquid assets in foreign currencies also qualify.LIQUID ASSET HOLDING REQUIREMENTSThe requirements for liquid asset holding for repo sellers (borrowers) will gradually increase in three stages as shown in the table below from up to one percent of the transaction amount in July to up to ten percent between August 2020 and April 2021, and then to up to twenty percent thereafter.The above changes in regulations will go into effect on July 1, 2020 along with the improved rules on minimum margin requirements for repo buyers (lenders).* Please refer to the attached PDF for details.
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Jun 24, 2020
- FSC Identifies D-SIBs for 2021
- The FSC identified a total of ten bank holding companies and banks as domestic systemically important banks (D-SIBs) for 2021 as follows: Shinhan Financial Group, Hana Financial Group, KB Financial Group, Woori Financial Group, NH Financial Group, Shinhan Bank, Woori Bank, KEB Hana Bank, KB Kookmin Bank and NH Bank. Compared to the previous year, Jeju Bank from Shinhan Financial Group will be removed from the D-SIB list pursuant to the temporary easing of financial regulations announced on April 17, which excludes smaller sized regional banks from the D-SIB designation and relieves them from the duty of additional capital surcharge.Those identified as D-SIBs will be required to set aside an additional capital surcharge of 1% in 2021.* Please refer to the attached PDF for details.
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Jun 23, 2020
