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May 19, 2010
- FSC Chairman's Speech - Korea Economic Forum
- Ⅰ. GreetingsGood morning, ladies and gentlemen!I would like to begin with my thanks to Mr. Song Philho, CEO of JoongAng Ilbo, Mr. Lho Cholsoo, publisher of JoongAng Daily, and Mr. Chung Ki-young, president of Samsung Economic Research Institute, for inviting me to speak at today’s forum.I also wish to acknowledge and thank honorable ambassadors, business leaders, and members of the foreign press who are with us today.The global financial crisis, unprecedented in both scale and scope, now appears to have run its course.Troubling new developments in the euro-zone economies, however, remind us that there are still many post-crisis uncertainties we must contend with.So, once again, we must wonder where the euro-zone crisis is headed, and what impact, if any, it may have on Korea’s financial markets and the economy.And it is my hope that today’s forum will shed new light on some of the questions that are on everyone’s mind.This morning, I would like to use my time to outline major financial policy issues we confront and tasks that lie ahead.Ⅱ. Korea’s Financial Policy: Current Issues TasksThere is no question that the global financial crisis forced us to reflect on our past and take stock of what went wrong.The crisis was, in many ways, a heavy blow to our conventional wisdom: namely, a blind faith in market efficiency, innovation and risk-taking.Now, with the benefit of hindsight, the international community is working to introduce wide-ranging financial regulatory reform measures.I believe we must prepare wisely for what lies ahead and maintain our vigilance on changes that are unfolding in the global financial environment.For our part, we are going to formulate financial policies within the context of the new global financial order with a focus on enhancing Korea’s financial capabilities.Addressing Destabilizing FactorsFirst and foremost, we will continue to respond swiftly and preemptively to destabilizing market developments to put out the fire befor
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Mar 31, 2010
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Feb 10, 2010
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Jan 28, 2010
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Jan 13, 2010
- Introduction of Foreign Investor Express Card
- The Financial Services Commission (FSC), the Ministry of Justice and the Fn Hub Korea (the Center) of the Financial Supervisory Service have agreed to issue the "Financial Investor Express Card" with an aim to increase the number of foreign executives of foreign financial institutions eligible for fast-track immigration lanes. Also, the Center has published the "Visa Immigration Guide for Foreign Employees of Financial Institutions" to help meet foreign employees' needs related to immigration and visa issues.Financial Investor Express CardWith the introduction of the Financial Investor Express Card, foreign executives of a Korean branch of a foreign financial firm will become eligible to use fast-track immigration lanes.So far, only the executives of a Korean subsidiary of a foreign-invested enterprise and the holders of the Investor Express Card1 have been permitted to use the fast track.However, to reflect the contribution of branches of foreign financial firms to the Korean economy and to help attract foreign investment, the three organizations have decided to expand the benefits of fast-track immigration lanes.The Financial Investor Express Card will be issued to deputy general managers or higher executives, holding a supervisory intra-company transfer (D-7) visa, of a Korean branch with an operation fund of KRW 7 billion or more.The FSC and the Center will complete the preparations by the end of January 2010 and begin to accept applications and issue the card from February. (Please call Financial Hub Korea at +822-3145-7171 for inquiries)The introduction of the card is expected to improve conveniences of foreign investors and promote foreign investment in the financial industry.Visa Immigration Guide for Foreign Employees of Financial InstitutionsTo make a better living environment for foreigners, the Center, with the cooperation of the Ministry of Justice, has been providing foreign employees of financial institutions and their families with supporting service
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Jan 11, 2010
- Progress on Improving Banks' Corporate Governance
- The global financial crisis has shed light on the importance of corporate governance in financial institutions. In particular, banks have been the major beneficiaries of government relief programs* such as government guarantee for bank deposits and foreign debts. However, as the OECD and the BCBS noted, banks’ board of directors often neglected their social responsibility by failing in risk management, pursuing short-term profits, and paying out excessive compensation. Against this backdrop, improving corporate governance in financial institutions, particularly in the banking sector, is being actively discussed at the global level. Direct financial regulations may bring about side effects by undermining financial inter-mediation and adding burden to financial consumers. In contrast, improving corporate governance minimizes the side effects and restores the public trust i n financial institutions to ensure that the financial sector can support the real economy and prevent the recurrence of crisis.An overview of global discussions1. OECDThe OECD reports, The Corporate Governance Lessons from the Financial Crisis (Feb. 2009) and The Corporate Governance and the Financial Crisis: Key Findings and Main Messages (June 2009), assert that corporate governance in financial institutions should be improved, citing that the boards of directors, particularly outside directors, involve problems such as the pursuit of short-term oriented profit, the payment of excessive compensation, and the failure of risk management, and also citing that the current system doe s not give shareholders enough power to hold the management in check. To address these weaknesses, the OECD is working with the FSB to publish a set of recommendations on improving corporate governance, Strategic Response to the Financial Crisis.2. U.K.Since the Turner Review point ed out the need to improve corporate governance, Sir David Walker has led an independent review of corporate governance in the UK banking ind
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Dec 30, 2009
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Dec 09, 2009
- AMCHAM Luncheon Speech
- Ⅰ. Introductory RemarksThank you, Mr. Chairman, for the warm welcome.Members of the American Chamber of Commerce, distinguished guests, and ladies and gentlemen!I am delighted to speak to you today, and I thank Chairman David Ruch and President Amy Jackson for arranging this very special gathering.I am also pleased to meet members of the U.S. business community here in Korea who joined us today.Most of all, as a representative of the Korean government, I thank AMCHAM for its commitment and dedication to advancing economic ties between the U.S. and Korea.I express my confidence that AMCHAM will continue to serve as a vital link that unites us and enhances our partnership.Ladies and gentlemen!I think it's fair to say that this year has truly been a wild ride.Now, the end of 2009 is almost upon us, and a new year is just around the corner.Today, I will use this occasion to look back at the major economic and financial policies put in place this year, and explore the tasks ahead of us.Let me first quickly review some of the recent economic and financial market trends.Ⅱ . Recent Economic and Financial Market TrendsThe global economy fell into a severe recession in 2009 as a result of a financial crisis triggered by the collapse of Lehman Brothers.But this was also a year of renewed optimism as the global economy hit the bottom and started to move into a recovery phase.Fortunately as well, the Korean economy bounced back quite rapidly in the first half of 2009.And this momentum continued into the second half, as the economy grew 3.2% over the previous period in the third quarter.In fact, the OECD recently declared Korea to be the fastest recovering economy among its members and revised upward its growth outlook for Korea.Korea's financial markets also rapidly returned to normal from the first half on the back of more upbeat growth prospect and global financial market stability.Key financial market indicators, including stock prices and CDS spreads, have also returned
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Dec 03, 2009
- UBS Korea CEO/CFO Forum 2009 Luncheon Speech
- Ⅰ. Introductory RemarksGood afternoon, ladies and gentlemen!Let me first thank Mr. Jae-hong Lee and Mr. Young Chang of UBS Korea for having me here today.It is also a great pleasure to see so many distinguished business leaders and investors together in one place.We are now coming to the end of 2009, and winter is almost upon us.It has been a year of both despair and hope.But, fortunately, this time around, we are not going to go through the bitter cold we had to bear at the height of the financial crisis last winter.The global economy has been gradually emerging from the panic of a year ago and there is hope ahead.Yet, new concerns, such as fears of another asset bubble and major economies' swelling fiscal deficits, are clouding the outlook for the world economy.In this context, I shall speak today about how the crisis has affected Korea and what the future tasks are for the Korean government.Ⅱ . Lessons from the Global Financial CrisisNow, many wonder what has been the secret behind Korea's vigorous recovery from the crisis.I would say that one unique contributing factor is our experience with a financial crisis a decade ago.This put Korea’s corporate and financial sectors in strong shape and enhanced the government's ability to manage the crisis.And yet, the latest crisis demonstrated that our past experience did not entirely work in our favor.Let me explain.The origin of the 1997 crisis can be traced to internal distortions and distresses built up during decades of rapid economic growth. In contrast, the latest crisis originated from outside Korea.Unlike the major economies that suffered from massive financial implosions, the Korean economy was on a firm footing with healthy corporate and financial sectors.Despite this, the impact of the crisis on Korea was disproportionately large because of the stigma from the 1997 crisis.Some overseas media and investors oddly took the view that a second financial crisis could occur in Korea.This sparked negative percep
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Nov 24, 2009
- KDIC sells its stake in Woori Finance Holdings
- On 24 November, 2009, the Korea Deposit Insurance Corporation ("KDIC") sold 56,420,000 shares (approximately 7.0% of the total shares outstanding) of Woori Finance Holdings ("Woori") in an after-market block trade sale prior to commencement of trading. The shares were sold to domestic and foreign institutional investors at a price of KRW15,350 per share, resulting in the recovery of KRW866 billion in public funds.Through this transaction, the KDIC has reduced its stake in Woori from 73% to 66%. To date, the KDIC has recovered KRW4.0 trillion of the total of KRW12.8 trillion in public funds it injected into Woori. The KDIC has actively sought to achieve an expedient privatization of Woori through minority stake sell-downs, but has faced difficulties in selling the stake as a result of a sharp decline of share prices amidst the ongoing global financial crisis.However, the recent sustained recovery in Woori's share price and other key factors has helped create a conducive market environment in which the sale could be contemplated. Given this, the KDIC sought and received approval from the Public Fund Oversight Committee for this block trade sale and was able to achieve a highly successful sale of a 7% stake to domestic and international investors.Through this transaction, the KDIC successfully achieved a timely recovery of public funds, underscored the government's strong commitment to the expedient privatization of Woori, and expects to provide future share liquidity in order to enhance the value of the residual stake and optimize future recovery of public funds.* Please refer to the attached PDF for details.
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Nov 11, 2009
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Nov 06, 2009
- 2009 Seoul International Finance Conference Congratulatory Speech
- Ⅰ. GreetingsGood morning, ladies and gentlemen!Let me first thank Mayor Oh Se-hoon for inviting me to this prestigious event.I am pleased to meet the honorable ambassadors and so many prominent figures from the financial area.In particular, I would like to welcome Mr. Dominic Barton, the global managing director of McKinsey Company, and all of the distinguished guests from abroad.Seoul is the core city behind Korea’s economic growth.And it is now striving to emerge as a financial hub as well, with Yeouido as its center.I hope this conference will serve as a meaningful platform for discussing these ambitions.Ⅱ. The Direction of Financial Hub DevelopmentThe global community has put its all into overcoming the worst financial crisis since the Great Depression.These efforts have paid off, and the global economy seems back on track.The Korean economy has recovered especially fast, and this has even been termed the “Astonishing Rebound.”Now, at this juncture, we are pursuing policies designed to shape the post-crisis Korean financial industry.As part of this, the government is exploring new strategies for building a financial hub.In fact, existing hub countries like the UK and Singapore already have post-crisis strategies in place.They are responding to the new landscape and are fast enhancing the competitiveness of their financial industries.Korea is a relative newcomer to this race.In order to compete, we will have to concentrate on what we do well and succeed as a Korea-specific hub.With this in mind, the government intends to speed up efforts to boost the competitiveness of financial firms.We will further improve financial infrastructure and ensure that a high quality business environment is in place.In addition, we will devote considerable resources to cultivating a large pool of financial experts.And you can be assured that particular focus will be put on Seoul so that it can firmly establish itself as a global financial hub.This will, however, take close
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Oct 28, 2009
- EUCCK Annual Seminar Luncheon Keynote Speech
- Ⅰ. Introductory RemarksGood afternoon, ladies and gentlemen!Let me begin by expressing my appreciation to the European Union Chamber of Commerce in Korea (EUCCK) for inviting me to speak today.I am also pleased to meet the honorable ambassadors, and corporate and financial leaders from across the EU countries.And, as a government official myself, I give particular thanks to the EUCCK for doing so much to build close ties between Korea and the EU.The EU is a key trade and investment partner, and our economic cooperation is greatly valued.As you know, Korea and the EU initialed a draft deal on an FTA on October 15th.This marked yet another turning point in the furthering of economic ties between Korea and the EU.And with mutual trust and understanding, I believe there is no doubt that our win-win relationship will only develop more.Now, in line with today's topic, let me briefly give my thoughts on "Korea's Economy and FSC Policy Directions".I hope it will help lend some insights on how you view the Korean economy.Ⅱ. Economic Trends and OutlookSince the global financial crisis began last year, the Korean government has responded swiftly to the crisis with aggressive and far-reaching measures.These measures were, namely, liquidity injections, interest rate cuts, expansionary fiscal policy, and corporate restructuring.And I'm proud to say that financial market anxieties and economic contraction were successfully brought under control.As a result, and due to improving global economic conditions, Korea has led the way out of the crisis by recovering the fastest among all OECD nations.The real economy surged back in the first half this year, and this tide of recovery has stayed robust in the second half.Also welcome news is that equity and other major financial indices have bounced back to pre-crisis levels.Investor sentiment has naturally gone up as well.Not too long ago, foreign investors had major concerns about the Korean economy.They even raised the possibility of
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Oct 16, 2009
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Oct 14, 2009
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Sep 17, 2009
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Sep 04, 2009
- Progress on Corporate Restructuring
- OverviewA preemptive corporate restructuring initiative has been carried out thus far in the interests of financial market stability and recovery from the economic crisis.Although partial signs of an economic recovery have recently been apparent, staying committed to a sustained restructuring effort remains paramount to strengthening Korea’s economic competitiveness going forward.Recognizing that an unwavering commitment to corporate restructuring is necessary, the government reviewed the progress during the President-led economic policy meeting earlier today and determined the future direction of corporate restructuring.Progress in Corporate RestructuringRestructuring of ConglomeratesA full-fledged corporate restructuring has been underway, which included contractual agreements with the nine conglomerates whose liquidity positions had earlier raised concerns. For the groups that signed contractual agreements, intensive self-rescue plans, such as sales of subsidiaries, asset dispositions, and capital expansions, are being actively pursued.Through the main creditor banks, the progress of the conglomerates’ self-rescue plans is being interminably reviewed, and by encouraging their prompt execution proactive restructuring is being given added impetus.Industry-Specific RestructuringTo lay to rest market uncertainties surrounding the possible distress in construction, shipbuilding, and shipping industries, 46 of the 277 companies that were rated C and D were selected for restructuring.Most of the creditors and the respective workout companies have entered into MOUs and are moving quickly through restructuring, such as debt rescheduling and self-rescue plans. As a result, six of the companies have since graduated from workout. Among the 14 D-rated companies, seven companies were called to repay their loans, three companies were put to court receivership, and four were brought subject to the process of liquidation and dissolution.Restructuring of Large Individual Compa
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Aug 19, 2009
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Jul 28, 2009
- Privatization of Korea Development Bank
- After four months of discussions, the Committee for the Establishment of Korea Public Banking Corporation (KPBC) formed by members from the FSC, MOSF, MKE, and professionals from the private sector has concluded on the following specific spin-off plan for KDB.A focus has been given to dividing the assets fairly and allocating them in a reasonable manner so that KDB can be privatized smoothly and KPBC can conduct public lending effectively.KDB is forecast to have assets of KRW 172.2 trillion, liabilities of KRW 155.0 trillion, shareholders’ equity of KRW 17.1 trillion and a BIS ratio of 13.1% as of end-August.Detailed Spin-off PlanA. Establishment of KDB Holding Company (KDBHC)KDBHC will be established with KRW 1.5 trillion of assets currently held by KDB; Daewoo Securities (KRW 973.4 billion), KDB Capital (KRW 433.5 billion), KDB Asset Mgmt (KRW 41.6 billion), and Infra Asset Mgmt (KRW 11.7 billion).Its liabilities and shareholders’ equity will be KRW 0.35 trillion and KRW 1.15 trillion respectively.B. Establishment of Korea Public Banking Corp (KPBC)KPBC will be established with KRW 28 trillion in assets, KRW 3 trillion in shareholders’ equity and KRW 25 trillion in liabilities.The shares of government-owned companies (worth KRW 15.1 trillion) will be transferred to KPBC as required by law. By law, the government is required to invest 100% or at least more than 50% in public entities such as Korea Electric Power Corporation, Seoul Metropolitan Rapid Transit Corporation and Korea Water Resources Corporation.The shares of companies undergoing restructuring, namely Hyundai Engineering Construction, Hynix, SK Networks, Korea Aerospace Industries and Daewoo International, will also be transferred to KPBC.Assets injected into the Bank Recapitalization Fund, cash assets of KRW 3 trillion and the KDB Capital building will be transferred to the KPBC.Industrial Finance Bonds (IFB), which account for most of KPBC’s liabilities of KRW 25 trillion, will be transferred o
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Jul 22, 2009
- Amendments to the Financial Holding Companies Act
- Relating to Separation between Industrial and Financial CapitalThe National Assembly has approved the amendments to the Financial Holding Companies Act to be enacted on October 10, 2009, resulting in the relaxation of a "non-financial business operator" (NFBO) from taking ownership of a bank holding company.Currently, an NFBO is not allowed to own more than 4% of the voting shares of a bank holding company. When the amendments become effective, they will be allowed to own up to 9% of the shares. This is possible under the precondition that an advance-screening procedure and a stringent post-supervision be in place to prevent industrial capital from manipulating the financial system.When an NFBO wants to own more than 4% of the voting shares of a bank holding company, become the largest shareholder or participate in management, it must do so with a preapproval of the FSC. And a more stringent post-supervision will be in place to restrict any illegal transactions between the bank and the largest shareholder.Also, when an NFBO invests into a private equity fund (PEF) through a limited partnership and the regulation in which the PEF not be treated as an NFBO has been amended. And the current limit on the amount an NFBO can invest into such PEF and not be regarded as an NFBO (10%) will be raised to 18%. Moreover, the maximum amount of which affiliated companies can jointly invest into such PEF and not be regarded as an NFBO (30%) will also be raised to 36%.In the past, the National Pension Service (NPS) was generally perceived as being ineligible to become a major shareholder of a bank holding company because it was considered an NFBO. However, if certain criterions are met, it will not be deemed as an NFBO.Relating to Regulation on Non-bank Financial Holding CompaniesFour months after the promulgation of the amendments to the Financial Holding Companies Act, a non-bank holding financial company will be allowed to take controlling ownership of non-financial companies. Fi
