Press Releases - Financial Services Commission

Press Releases

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Sep 17, 2007

Financial Holding Companies' Net Income: First Half, 2007

The net income of the four domestic financial holding companies—Woori Financial Group, Shinhan Financial Group, Hana Financial Group, and Korea Investment Holdings—totaled KRW4.02 trillion on a consolidated basis for the first six months of 2007, an increase of KRW1.10 trillion or 37.8% from the same period a year earlier. Excluding the one-time gains (KRW1.17 trillion in pretax income) from the sale of shares in LG Card by the holding companies, net income for the period drops to KRW3.17 trillion.ROA rose modestly for Woori, Shinhan, and Hana but fell for Korea Investment. Excluding LG Card-related gains, ROA fell compared to the same period a year earlier.As of end-June, 2007, assets of the four financial holding companies totaled KRW589.8 trillion on a consolidated basis, up KRW74.5 trillion from the same period a year earlier. Most of the asset increase resulted from the takeover of LG Card by Shinhan (KRW9.8 trillion), growth of loans to small- and medium-sized companies (KRW46.2 trillion), and increases in securities assets.In terms of group assets, banking constituted the largest asset for Woori (89.6%), Shinhan (83.4%), and Hana (94.9%). For Korea Investment Holdings, securities businesses made up 91.3% of the group assets.* Please refer to the attached PDF for details.
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Sep 03, 2007

Bank Net Income: First Half, 2007

Bank net income for the first half of 2007 totaled KRW9.92 trillion, up KRW1.88 trillion from KRW8.04 trillion a year earlier. Bank income for the first half of the year was helped by after-tax gains totaling KRW3.1 trillion from the sale of domestic banks’ equity stakes in LG Card (KRW2.9 trillion) and SK Networks (KRW200 billion). Excluding these gains, net income for the period totaled KRW6.8 trillion, compared with KRW7.2 trillion a year earlier.Whereas interest income rose 4.1% from KRW14.6 trillion to KRW15.2 trillion, non-interest income nearly doubled from KRW4.1 trillion to KRW8.1 trillion in the first half of the year on increased revenues from service fees and securities gains. Service fee income—including income from money transfer services, ATM and bancassurance sales—totaled KRW2.24 trillion, up from KRW1.94 trillion a year earlier.ROA for the first half of the year averaged 1.52%, compared with 1.41% a year earlier, but excluding the one-time gains realized from the sale of shares from debt-to-equity swaps ROA drops to 1.05%, lower than 1.25% for H1, 2006.The so-called structural profitability—a measures of profitability defined as bank income which is generated from operational activities and is both sustainable and recurring (Framework for the Assessment of Bank Earnings, BIS, 2002)—came to 1.47%, down from 1.62% a year earlier. A drop in net interest margin was the key factor for the lower profitability.* Please refer to the attached PDF for details.
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Aug 31, 2007

Bank Loans Classified as Substandard or Below: June, 2007

The ratio of bank loans classified as substandard or below (SBL ratio) came to 0.78% at end-June, 2007, down from 0.84% at end-2006 and the lowest level since the adoption of forward-looking criteria in 1999.1 A drop in new delinquencies (from KRW6.4 trillion to KRW5.7 trillion) as well as an increase in total outstanding loans (from KRW930.2 trillion to KRW999.5 trillion) during the first half of the year from the second half of 2006 led to the drop in the overall SBL ratio for the period.By loan type, the SBL ratios fell for corporate and household loans from end-2006, averaging 0.86% and 0.62%, respectively. The ratio for credit card receivables also fell from 1.33% to 1.09% during the same period.* Please refer to the attached PDF for details.
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Aug 30, 2007

Mr. William A. Ryback, Former Deputy Chief Executive of Hong Kong Monetary Authority, to Join the Financial Supervisory Service

The Financial Supervisory Service announced on August 30 the appointment of Mr. William A. Ryback, the former Deputy Chief Executive of Hong Kong Monetary Authority (HKMA), as Special Advisor to the FSS to help improve financial market regulation and foster global standards. The FSS expects Mr. Ryback to play an active role as well in helping the FSS strengthen its supervisory networks and cooperation with foreign regulators and international regulatory organizations.Mr. Ryback has extensive experience and expertise in banking supervision and international financial affairs from his thirty five years of professional career at the U.S. Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency. He also served as the Chairman of the Association of Supervisors of Banks of the Americas and a member of the Core Principles Liaison Group of the Basel Committee on Banking Supervision, and has over the years established strong ties and network with financial supervisors worldwide and multilateral organizations. Prior to the FSS appointment, Mr. Ryback worked as the Deputy Chief Executive of HKMA where he oversaw banking supervision and contributed to financial sector growth policies.Among others, the FSS expects Mr. Ryback to reinvigorate the ongoing preparations for the New Basel Accord as well as the FSS drive for deregulation and advanced financial supervision. With his strong ties and network with financial supervisors and international supervisory organizations, Mr. Ryback is also expected to make significant contribution to Korea’s financial hub initiative.Mr. Ryback will assume his duties at the FSS on October 22, 2007. Initially, he will act as Advisor to the Governor in international supervisory affairs such as the New Basel Accord and risk management in the banking sector. He is also expected to carry out special tasks on ongoing supervisory matters under the Governor’s direction. The FSS also announced that it will decid
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Aug 24, 2007

FSC to Step up Support for Korea Exchange's Bid for U.S. CFTC Contract Market Designation for KOSPI200 Futures Market

The Financial Supervisory Commission announced on August 22 that it will step up support for Korea Exchange’s application for Designated Contract Market (DCM) for KOSPI200 futures market from the U.S. Commodity Futures Trading Commission (CFTC).Currently, U.S. futures traders, including retail investors, are restricted from direct access to KOSPI200 futures market because it has not yet received DCM status from the U.S. CFTC. Thus, the participation of U.S. traders and retail investors in Korea’s futures market is expected to grow significantly when the market is granted the DCM status from the U.S. CFTC.Among the key designation criteria are the safety of futures products traded and an agreement on information exchange between the oversight authorities of the two countries. To date, the CFTC has notified Korea Exchange that the safety of KOSPI200 futures has met the DCM criteria (July, 2006). Going forward, the FSC will take steps to expedite the exchange of confirmation letters with the U.S. CFTC on supervisory exchange of information and take other support measures to accelerate the DCM approval process. Separately, the FSC plans to initiate discussions with the U.S. Securities and Exchange Commission on regulatory designation for U.S. investor’s access to Korea’s treasury futures and KOSPI200 options markets.* Please refer to the attached PDF for details.
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Aug 07, 2007

Chairman/Governor Kim Yong-Duk Takes Office at Financial Supervisory Commission and Financial Supervisory Service

The Financial Supervisory Commission and the Financial Supervisory Service announced that Mr. Kim Yong-Duk took office as the sixth Chairman and Governor of the Financial Supervisory Commission and the Financial Supervisory Service on August 6. Chairman/Governor Kim succeeds Mr. Yoon Jeung-Hyun, whose three-year term ended on August 3. Mr. Kim served as Economic Advisor to the President before assuming his new position.Chairman/Governor Kim began his career in public service at the Ministry of Finance and Economy (former Ministry of Finance) in May, 1977. After taking an overseas assignment as a Treasury Officer at the Asian Development Bank in 1982, Mr. Kim returned to the MOFE in 1989 and served at several key positions in international affairs and finance, including Secretary for Financial Affairs to the President, Director-General of International Finance Bureau, Deputy-Minister for International Affairs, and Commissioner of Korea Customs Service. In May, 2005, he was appointed Vice Minister of the Ministry of Construction and Transportation and served in that position until November, 2006, when he became Economic Advisor to the President.Chairman/Governor Kim graduated from Korea University with B.A. in Business Administration in February, 1974. He also received an MBA from Ateneo De Manila University during his tenure at the Asian Development Bank.* Please refer to the attached PDF for details.
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Jun 22, 2007

FSC/FSS to Host Second Asian Forum of Insurance Regulators in Seoul

The Financial Supervisory Commission and the Financial Supervisory Service will host the Second Asian Forum of Insurance Regulators (AFIR) in Seoul on June 27, 2007. AFIR is a gathering of insurance regulators from across Asia to promote regional dialogue and cooperation on insurance supervision and facilitate sound development of insurance markets throughout Asia. The first AFIR meeting was held in Beijing in October 2006, following a proposal by China Insurance Regulatory Commission in May 2005 to create a new forum to strengthen relations and cooperation among Asia’s regulators.Approximately thirty senior insurance supervisors from fourteen insurance supervisory authorities and the International Association of Insurance Supervisors (IAIS) are expected to participate in the Seoul meeting. The participating supervisors are China Insurance Regulatory Commission, Financial Supervisory Commission of Taiwan, Office of the Commissioner of Insurance of Hong Kong, Insurance Regulatory and Development Authority of India, Financial Supervisory Agency of Japan, Insurance Commission of Jordan, FSC/FSS of Korea, Monetary Authority of Macao, Bank Negara Malaysia, Insurance Board of Nepal, Saudi Arabian Monetary Agency, Monetary Authority of Singapore, Insurance Department of Ministry of Commerce of Thailand, and Ministry of Finance of Vietnam.Four separate sessions are planned throughout the day for discussions on risk-based supervision, insurance fraud, natural and man-made catastrophic disasters, and regional cooperation. The FSC/FSS plans to make presentations on Risk Assessment and Application System (RAAS)—a new tool implemented in April this year to better assess insurance companies’ risk profiles—and ongoing preparations for the adoption of risk-based capital. A proposal for the creation of a working group to improve solvency regime for insurance companies is also planned.* Please refer to the attached PDF for details.
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Jun 14, 2007

Bank BIS Capital Ratios, March, 2007, and Implementation of Basel II Capital Accord

Bank BIS Capital RatiosBank BIS capital ratios as of the end of March, 2007, came to 12.99%, up from 12.75% at end-2006. With bank net income totaling KRW6.6 trillion for the first three months of 2007, bank capital increased 5.0% or KRW5.9 trillion while risk-weighted assets grew 3.0%. Tier-1 capital rose 7.4% or KRW6.3 trillion, but tier-2 capital experienced a modest drop of 1.0% or KRW300 billion. The capital ratio jumped for 12 banks but fell for six others during the January-March period.Timetable for Basel II Capital AccordThe FSC/FSS is expected to finalize by the end of June new capital standards that will take effect beginning in January, 2008, under the Basel II capital accord (January, 2009, for advanced IRB approach). The FSC/FSS is also expected to commence the approval process for banks opting for IRB approach later this year.* Please refer to the attached PDF for details.
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May 25, 2007

Chairman/Governor Yoon Jeung-Hyun to Hold Roundtable Meeting in London and Deliver Keynote Speech at IIF Spring Membership Meeting in Athens

Chairman/Governor Yoon Jeung-Hyun of Financial Supervisory Commission and Financial Supervisory Service is scheduled to travel to Basel, London, and Athens from May 24 to June 3 to meet with high-level regulators, hold a roundtable meeting with senior executives of global financial firms, and deliver the keynote speech at the Spring Membership Meeting of the Institute of International Finance (IIF).In Basel, Chairman/Governor Yoon is expected to meet with Dr. Yoshihiro Kawai, Secretary General of the International Association of Insurance Supervisors (IAIS), for discussions on issues ranging from Asia’s insurance market development to progress with IAIS Multilateral Memorandum of Understanding initiative. Chairman/Governor Yoon also plans to hold a high-level meeting with BIS General Manager Malcolm Knight and Secretary General Stefan Walters of the Basel Committee for discussions on, among others, progress with Basel II and issues related to cross-border implementation of the new accord.During his stay in London, Chairman/Governor Yoon is expected to sign a Memorandum of Understanding on supervisory cooperation with Chairman Callum McCarthy of U.K. Financial Services Authority and meet with Dr. Chris Gibson-Smith, Chairman of London Stock Exchange, for discussions on global equity markets, exchange consolidation, and London’s success as a global financial center. A roundtable meeting with senior executives of international financial services firms that are active in Korea and throughout Asia is also scheduled in London. Chairman/Governor Yoon plans to stress the success Korea has had with deregulation, reinforcing market discipline, and improving the overall regulatory environment for foreign businesses and investors.In Athens, Greece, Chairman/Governor Yoon will deliver the keynote speech at the IIF Spring Membership Meeting before senior business executives of global financial firms. In his speech, Chairman/Governor Yoon is expected to emphasize the benefits
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May 17, 2007

New Electronic Foreign Investor Registration Service to Begin June 1

The Financial Supervisory Service announced that a new electronic registration service that processes foreign investors’ registration applications and issues registration certificates electronically will begin June 1, 2007.Launched as part of an ongoing effort by the FSS to continually improve Korea’s investment climate for global investors, the new electronic registration service utilizes the financial information network shared by the FSS and financial institutions for information exchange. A foreign investor using the new electronic registration service may send the registration documents via the designated financial institution (agent) and receive the registration certificate electronically. A foreign investor may designate an agent financial institution from banks, securities companies and Korea Securities Depository (KSD). Registration certificate issued by the FSS is used as a verification of the investor’s lawful identity.The new electronic registration service is a significant improvement from the current paper-based registration, under which a foreign investor submits (through an agent financial institution) the registration application along with the supporting documents to the FSS and waits up to four days for the registration certificate. Under the new electronic service, the processing time for a new registration certificate is expected to be shortened to approximately four hours.The FSS also plans to provide information on Korea’s investment procedures in English on the FSS Internet homepage (http://english.fss.or.kr/fsseng/index.jsp) beginning July 1, 2007. It will include explanations on Korea’s investor registration system, the registration procedure, and rules and regulations pertaining to investor registration. By providing easily accessible online information on investor registration in English, the FSS hopes to enhance global investors’ understanding of Korea’s investment climate and stimulate new interest in Korea’s stock marke
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May 11, 2007

IIF-FSC/FSS Strategic Dialogue on Effective Regulation

The Financial Supervisory Commission/Financial Supervisory Service jointly hosted with the Washington DC-based Institute of International Finance (IIF) Asia’s first “Strategic Dialogue on Effective Regulation” on May 10, 2007. The meeting was held in Seoul and attended by senior regulators from ten regulatory authorities and central banks in the Asia/Pacific region and executives and representatives from global financial services firms that are active in the region.In his remark, Chairman/Governor Yoon Jeung-Hyun commended the initiative taken by the IIF to encourage dialogue between regulators and globally active financial services firms and stressed the need for stepped-up efforts on harmonization of cross-border financial regulations in order to build a more effective regulatory environment across the Asia/Pacific region. To this end, he proposed that the public/private sector dialogue take place regularly as a way to build new momentum and facilitate continued progress. As a first concrete step out of the May 10 dialogue, Chairman/Governor Yoon also proposed the creation of a task force made up of representatives from the region’s regulatory community, the financial services industry, and the IIF for more in-depth discussions and exchange of public/private sector views.Since assuming the helm of the FSC and the FSS in August 2004, Chairman/Governor Yoon has been a strong advocate of cooperation among regulators and has signed MOUs on exchange of information and cooperation with 16 regulatory authorities in 11 countries. The successful conclusion of the May 10 strategic dialogue and Chairman Yoon’s proposal for continuing public/private sector engagement also highlight Korea’s commitment to promoting robust regional cooperation and building an effective regional regulatory framework that supports financial stability and economic growth in the Asia/Pacific region.* Please refer to the attached PDF for details.
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Apr 05, 2007

Bank BIS Capital Ratios, 2006

Bank BIS capital ratios at the end of 2006 averaged 12.75%, slightly down from 12.95% at end-2005. With net income of KRW13.3 trillion for 2006, bank capital increased 16.1 trillion or 15.7% from a year earlier. But the increase was offset by a 17.5% jump in risk-weighted assets totaling KRW138.2 trillion, mostly due to the growth of mortgage and SME loans. Tier-1 capital rose 15.9% (KRW11.7 trillion) and tier-2 capital 15.1% (KRW4.4 trillion).The capital ratio rose for six banks but fell for the 12 others compared to end-2005. In terms of international comparison, recent figures from IMF financial soundness indicators and others show that the 12.75% capital ratio for domestic banks is at the higher end of the 12.15%-12.76% range for U.S., U.K., and German banking organizations. With continued income growth and further room for tier-2 capital, domestic banks are expected to maintain robust capital positions going forward.* Please refer to the attached PDF for details.
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Mar 21, 2007

Signing of Statement of Protocol with U.S. PCAOB

The Financial Supervisory Commission and the Financial Supervisory Service announced the signing of Statement of Protocol (“Statement”) with the U.S. Public Company Accounting Oversight Board (PCAOB) on March 21. The Statement, signed by Mr. Yoon Jeung-Hyun, Chairman of the FSC and Governor of the FSS, and Mr. Mark Olsen, Chairman of the PCAOB, in Seoul, is intended to facilitate cooperation in matters related to the oversight of the auditors of both countries and thereby contribute to improved accuracy and reliability of audit reports.The Statement consists of four key provisions on cooperation relating to inspection, investigation, sanction, and confidentiality. In respect of cooperation in an inspection, the Statement provides that each regulatory authority may, on behalf of or in support of the other, review audit papers, conduct interviews of an audit firm’s personnel, and assess an audit firm’s quality control system. In determining sanctions for accounting firms that fall within the regulatory jurisdiction of both the FSC/FSS and the PCAOB, the Statement provides that each regulatory authority shall endeavor to take into account the laws and regulations of the other. In respect of confidentiality, the Statement calls on both the FSC/FSS and the PCAOB to hold confidential documents and information created or received in the course of cooperation.For the FSC/FSS, the signing of the Statement is the first ever with a foreign audit oversight authority, and the expectation is that the Statement will contribute to enhanced cooperation on the oversight of accounting firms between the two countries. With regulators elsewhere stepping up oversight of auditors of multinational companies whose securities are traded in their markets, the FSC/FSS will endeavor to enter into similar cooperative arrangements with other foreign regulatory authorities in order to avoid duplicate audit supervision and reduce compliance cost.* Please refer to the attached PDF for detail
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Feb 01, 2007

FSS to Launch Electronic Foreign Investor Registration and English DART Website

The Financial Supervisory Service will launch an electronic registration system for foreign investors and open an English DART website (http://enlgishdart.fss.or.kr) as part of an ongoing effort to simplify foreign investors’ investment procedures and improve their access to corporate information. DART, which stands for Data Analysis, Retrieval, and Transfer, is the FSS electronic disclosure system companies use to transmit regulatory filings and ongoing disclosures via the Internet.Electronic Registration of Foreign InvestorsUnder the current procedure, a foreign investor (or an agent) who wishes to acquire shares of listed companies and other exchange-traded securities submits an investment registration application along with the supporting documents to the FSS in person and returns three to four days later for the registration certificate.The new registration system, which is set to begin in May this year, will enable foreign investors to file investment registration applications and receive registration certificates electronically through financial institutions acting as their agents.Because the system utilizes information and telecommunication networks and electronic document exchange systems already used by financial institutions, no additional cost is expected from foreign investors or financial institutions. With electronic registration, the issuance of registration certificate, which numbers about 2,000 a year, is expected to be shortened from up to four days to no more than four hours.Opening of English DART WebsiteThe FSS will also open an English DART website (http://englishdart.fss.or.kr) on February 1 to improve foreign investors’ access to disclosures filed by Korea’s publicly traded companies. Foreign investors can use the English DART website to search all English disclosure documents voluntarily transmitted to DART and to Korea Exchange as well as corporate information available in English at Korea Listed Companies Association.The English DAR
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Jan 24, 2007

Preliminary Bank Net Income for 2006

Preliminary figures show domestic banks’ net income for 2006 will come to KRW13.49 trillion, compared with KRW13.63 trillion for 2005. Interest income rose KRW1.51 trillion on sharply increased lending, but the overall net earnings were held back by a KRW1.73 trillion jump in income tax expenses (partly from a drop in losses carried forward) for 2006. Operating and nonoperating income for the year totaled KRW13.26 trillion and KRW4.12 trillion, respectively.Loans outstanding at end-2006 totaled KRW873.8 trillion, up KRW122.4 trillion from end-2005 total of KRW751.4 trillion. Despite continued improvement in asset soundness, loan loss provisions fell only slightly in 2006—from KRW5.1 trillion to KRW5.0 trillion—due to more stringent provisioning requirements.ROA for 2006 fell to 1.12% from 1.27% a year earlier on reduced net interest margin. Gross profit ratio, a key measure of profitability, came to 2.82%, down slightly from 2.98% a year earlier.* Please refer to the attached PDF for details.
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Jan 18, 2007

FSC Proposes to Merge Korea Exchange's Dual Futures Trading Systems into Single Trading System

The Financial Supervisory Commission announced a proposal to integrate the dual futures trading systems of Korea Exchange into a single integrated trading system in order to facilitate trading in futures and improve market efficiency. Currently, two different futures trading systems—KOSPI futures trading system and Korea Treasury Bond (KTB) futures trading system—that were used by Korea Stock Exchange (KSE) and Korea Futures Exchange (KOFEX) before they were brought under the Korea Exchange are in use. Because of its dual nature, the current trading system is said to inflate transaction cost to investors and create system inefficiencies.Under the FSC proposal, tentatively set to be implemented by end-June this year, the KOSPI futures trading system is to be adopted at the Korea Exchange for all futures and options trading as it already effectively handles nearly all of futures and options trading, including KOSPI200 futures, KOSPI200 options, Star index futures, and stock options. The KOSPI futures trading system also has the advantages of familiarity to investors, significant cost-effectiveness compared to the KOFEX system, and locally developed technologies.When the integration is completed, investors and traders are expected to benefit from simpler and more consistent trading rules (e.g., buying and selling of futures and options with a single trading account), while the Korea Exchange is expected to save KRW2.2 billion in system maintenance cost a year.* Please refer to the attached PDF for details.
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Jan 12, 2007

FSS Launches Online Search & Retrieval Tool for Legal and Regulatory Statutes Governing Financial Supervision

The Financial Supervisory Service opened a new online search retrieval system for legal and regulatory statutes governing financial supervision along with their interpretations and applications on January 9. The new tool, a Korean-based website database that can be launched from the FSS Internet homepage, holds more than 1,900 separate entries (over 30,000 pages) on legal and regulatory statutes pertaining to financial supervision as well as their administrative and judicial interpretations and applications and explanation of FSS administrative procedures and financial supervision. The database for the new search retrieval system is set to be updated each month and is expected to increase by approximately one thousand new entries a year henceforth.BackgroundBecause of the generally complex nature of legal and regulatory statutes governing financial products and services, there has been a growing awareness of the need to make financial laws and regulations more accessible to the general public. The new online tool was prompted by this need to help the general public search and access financial laws and regulations more easily and at the same time improve regulatory transparency.The plan for the new system took shape in August, 2006, when the FSS proposed an open search retrieve system after thorough review and study of similar systems in use elsewhere. The system was completed in late 2006 and went online January 9 after a series of operational tests.A Centralized Database of Legal and Regulatory Statutes Governing Financial SupervisionThe new search retrieve system is designed to function as a centralized database of all the legal and regulatory statutes, guidelines, interpretations, and explanations governing financial supervision. In particular, the new online tool employs a system of codification to classify and group interpretations and explanations of legal and regulatory precedents by year, financial sector, business operation, and laws regulations.Use of the
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Dec 21, 2006

Bank BIS Capital Ratios, September 2006

Bank BIS capital ratios averaged 13.10% at the end of September, compared with 13.06% at end-June and 13.00% at end-2005. Bank capital rose KRW14.6 trillion (14.2%) on net income totaling KRW11.5 trillion for the first nine months of the year, while risk-weighted assets increased KRW105.5 trillion (13.3%) during the same period. Tier-1 capital rose 16.5% (KRW12.2 trillion) compared with an 8.3% increase (KRW2.4 trillion) for tier-2 capital.The capital ratio rose for seven banks but fell for the 11 others compared to end-2005. For some of the banks with a lower capital ratio than at end-2005, increases in capital did not keep pace with increases in risk-weighted assets. But all the 18 banks reported capital ratios in excess of 10% and expect to maintain strong capital positions going forward with solid net income.* Please refer to the attached PDF for details.
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Nov 24, 2006

Assessment of Private Equity Industry, November 2006

The Financial Supervisory Service issued an assessment of Korea’s private equity industry on November 22, 2006, to mark the second year of regulatory changes that allowed the formation of private equity funds (PEFs) as a recognized investment entity for the first time in December, 2004.Registered PEFsThere were 20 registered PEFs as of end-October with a total investor subscribed (committed) amount of KRW4.66 trillion, of which KRW1.99 trillion were actually called. Since the beginning of 2006, six PEFs were newly registered and one was terminated for a net increase of five. The subscribed amount increased KRW1.76 trillion and the called amount KRW760.6 billion in 2006. At the end of 2005, there were 15 registered PEFs with KRW2.9 trillion in total subscribed amount and KRW338.8 billion in total called amount.Fund RaisingThere were seven large funds (more than KRW300 billion), six medium-sized funds (between KRW100 billion and KRW300 billion), and seven small funds (less than KRW100 billion) as of end-October. Three of the large funds exceeded KRW500 billion in total subscribed amount. Most of the small funds were so-called “deal-by-deal” PEFs that specialize in a specifically targeted company.Management fees typically ranged between 1.5% and 2% of the subscribed investment amount when PEFs were first introduced. But with a majority of institutional investors preferring financial, rather than strategic, investment whose returns do not depend too much on the fund management skills of the general partners (managers) of PEFs, management fees fell to a lower range between 0.1% and 2% of the investment executed.InvestmentsEleven PEFs had executed investments totaling KRW999.0 billion in 27 companies, including a KRW343.9 billion takeover of a privately held company in June, 2006, the largest PEF investment to date. Since the beginning of the year, the number of companies in which PEFs invested jumped from 9 to 27 with the total executed amount sharply up from KRW26
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Nov 15, 2006

Bank Loans Classified as Substandard or Below: September 2006

Bank loans classified as substandard or below (SBLs)–substandard, doubtful, or presumed loss–totaled KRW8.8 trillion at the end of September, unchanged from end-June. But the ratio of SBLs to total outstanding loans fell to 0.98%, the lowest ratio since the forward-looking criteria were first adopted in 1999. The SBL ratio averaged 1.02% at end-June and 1.22% at end-2005. A surge in new loans, which pushed the total outstanding loans to KRW895.2 from KRW861.3 trillion, was mostly responsible for the drop in SBL ratio.Overall, the SLB ratios fell modestly for the key borrower groups from end-June, averaging 1.06% for corporate loans and 0.81% for household loans. The ratio for credit card receivables increased slightly from 1.80% at end-June to 1.84%. But compared to end-2005, the SBL ratios fell for all the loan types.* Please refer to the attached PDF for details.
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