-
Dec 10, 2019
-
Dec 05, 2019
- Measures to Improve Management of Risk Exposure in Project Finance
- The government introduced its plans to improve the management ofrisk exposure in real estate project finance on December 5.BackgroundProject financing in real estate is a financing mechanism based onthe business value of the project and the expected cash flows of the project inthe future. Due to the recent financial deepening and continuing low yields,project financing has increased significantly. Project financing provides an efficientway to finance real estate or infrastructure development projects.However, due to heavy reliance on the expected value of theproject, risk exposure is highly dependent on market conditions. Without propermanagement of risks, or in the case of a distortion of profits or risks, it maypose a threat to financial stability.Risk exposure in project financing has continued to increase especiallyin non-bank sectors since 2013. The prevalence of high-risk project financingloans, such as bridge loans, has dropped whereas the level of exposure bysecurities companies and specialized credit finance companies increased. Debtguarantees in project financing also increased as the burden of credit exposureshifted from construction companies to financial institutions.Recent TrendsAt the end of June 2019, the total amount of debt guarantees inproject financing stood at KRW28.1 trillion, out of which KRW26.2 trillion issuedby securities companies. The outstanding loan balance in project financing stoodat KRW71.8 trillion, rising on average 11.6 percent a year from KRW39.3trillion at the end of 2013. By the end of June 2019, both the default rate andthe sub-standard asset ratio continued to decline since 2013 from 13.0 percentto 1.9 percent and 16.9 percent to 3.0 percent, respectively, due to anincreased volume in project financing loans.Key MeasuresI. Improvingthe Soundness of Debt Guarantees in Project Financing► Establishing anupper ceiling on debt guaranteesUnder the current system,securities companies face no upper limits on issuing debt guarantees
-
Dec 04, 2019
- Measures to Promote Fintech Scale-ups
- The FSC announced measures to promote fintech scale-ups on December 4, which includes 24 key tasks in 8 different policy areas.BACKGROUNDThe government has been promoting the fintech industry as part of its innovation-led growth strategy amid digital transformation and the 4th industrial revolution. To this end, the government has introduced a financial regulatory sandbox, open banking, regulatory reforms and budget earmarks for fintech. In order to further develop Korea’s fintech industry and its ecosystem, the government plans to implement the following fintech scale-up strategies, which builds upon the progress made so far.KEY MEASURESI. IMPROVING THE CURRENT REGULATORY SANDBOX SYSTEM► Designate more than 100 ‘innovative financial services’ by the end of March 2020, which marks the one-year anniversary of launching the regulatory sandbox► Improve rules and practices in operating the regulatory sandbox: (i) protect innovative ideas and technologies through patents and intellectual property rights (e.g. providing legal counsel or expediting patent dispute resolution); (ii) impose a minimum level of additional requirements on ‘innovative financial services;’ and (iii) grant continuation of designation status through MA► Provide continuous support (e.g. costs on testing, security inspection, office space, etc.) for the entire cycle from designation of ‘innovative financial services’ to commercialization of innovative financial solutions.► Set up a supervisory framework tailored to the promotion of fintech firms – e.g. conducting supervision and inspection aimed at providing counseling or establishing regulatory grounds to grant fintech firms immunity in case of minor violations.II. PERFORMING REGULATORY REFORMS TO FACILITATE FINTECH DEVELOPMENT► Promote a flexible and dynamic regulatory environment where testing of ‘innovative financial services’ can lead to commercialization and ultimately to an improvement in regulatory reforms.► Con
-
Nov 29, 2019
-
Nov 28, 2019
-
Nov 28, 2019
-
Nov 27, 2019
-
Nov 27, 2019
-
Nov 26, 2019
- FSC Chairman Speaks on Importance of Innovation in Movable Asset-based Financing
- FSC Chairman Eun Sung-soo visited a peer-to-peer lending firm Popfunding on November 26, and held talks on promoting innovative financial solutions through movable asset-based financing.During the talks, Chairman Eun stated that the traditional lending practice centered on real estate has begun to change due to government efforts to facilitate the development of financial products which recognize movables as collateral. Merely two years ago, movable asset-based financing remained unfamiliar. However, banks have set up a movable collateral management system using Internet-of-Things (IoT) as they led innovative initiatives in this field.As a result, the amount of movable asset-based loans rapidly increased from KRW735.5 billion at the end of last year to more than KRW1.2 trillion at the end of September 2019.Moreover, Chairman Eun emphasized that due to innovative ideas in movable asset-based financing, new solutions have emerged which would have been unlikely in the past. For instance, inventory as collateral has received relatively low attention compared to machinery or intellectual property due to difficulties in assessment and management. However, with movable asset-based financing, Popfunding began to offer e-commerce firms not only business loans at low to medium interest rates but also systematic inventory management and warehouse services.Chairman Eun said that more innovative solutions should be introduced in the field of movable asset-based financing in order to facilitate start-ups and SMEs.The government has announced a revision to the Act on Security over Movable Assets and Receivables on November 5, and plans to set up an organization that supports redemption of movable collateral in the first half of 2020.* Please refer to the attached PDF for details.
-
Nov 21, 2019
-
Nov 20, 2019
-
Nov 19, 2019
- Financial Cooperation in ASEAN Region
- BACKGROUNDASEAN is a large market which has achieved remarkable economic growth with its growing population. The population of the region is expected to rise to around 688 million by 2024. In the financial sector, Korea and ASEAN countries have made an effort to establish strategic partnership to promote economic and financial growth in ASEAN region.Korea has focused on enhancing financial cooperation with ASEAN by supporting Korean companies’ business operation in the region and promoting partnership in developing financial infrastructure.FEATURES OF FINANCIAL COOPERATION IN ASEAN REGION I. EXPECTATIONS OF HIGH PROFITSAs ASEAN has high growth potential, many companies and institutions in the financial sector are willing to expand their business in the region. In fact, as of June, 2019, the number of subsidiaries and branches opened by Korean financial firms reached 150 in ASEAN region, including Indonesia and Vietnam, rose 92% compared to the end of 2011. The asset of overseas subsidiaries and branches in ASEAN region accounts for 14% of the total asset; however, the profits account for 30% of the total profits.Subsidiaries and branches of Korean banks in ASEAN region have higher Return on Asset (ROA) compared to the banks in domestic market.II. DIVERSIFICATION OF OVERSEAS BUSINESS Korean financial firms diversify their overseas business by establishing non-bank financial institutions and investing in shares of non-banking financial firms in the region.For example, Shinhan bank started banking business in ASEAN region, and then it expanded their business into other financial services, including credit card, financial investment and consumer finance. This strategy helped the financial firm to advance into new markets by creating synergy effects among affiliates. III. LOCALIZATION Korean financial firms accelerate their expansion by establishing more subsidiaries than offices or branches. In the process of localization, Korean financial firms tend to consider the e
-
Nov 18, 2019
-
Nov 14, 2019
-
Nov 14, 2019
-
Nov 11, 2019
-
Nov 08, 2019
-
Nov 07, 2019
- Vice Chairman Speaks on Importance of Financial Information Security
- Vice Chairman Sohn Byungdoo attended the Financial InformationSecurity Conference 2019 hosted by the Financial Security Institute on November7, and delivered congratulatory remarks on the theme of financial information securityand maintaining innovation in the financial sector.The following is a summary of Vice Chairman Sohn’s remarks:The advancement of digital technologies has made hyperconnectivitypossible where individuals are able to get connected with devices in multipleways. In personal finance, too, opening a bank account to wire transferring moneyand managing assets can all be done in the palm of your hands using a mobiledevice. The blurring of boundaries between different industries has broughtsignificant changes.Amid these changes, the government has been promoting digital innovationin the financial services industry. First, the implementation of financial regulatorysandbox has encouraged fintech firms and financial institutions to testinnovative ideas. Second, the government introduced open banking system, andhas been working on revising the relevant laws, such as the Credit InformationAct, to provide greater access to financial services.The accelerating convergence between financial services andinformation technologies has expanded the type and scope of potential cyberthreats. Due to an increased dependence on non-financial sectors, such as ICT,the financial services sectors are exposed to greater risks from non-financialsectors. Digital transformation has led to increased interconnectedness betweenfinance and telecommunications, which makes financial information security a highpriority.In order to continue digital innovation in the financial sectors,a proper mix of stability, harmony and innovation is required. Financialinformation security should be considered as investment toward innovation, insteadof cost and regulation. Financial institutions and fintech firms should be ableto take primary responsibility in protecting information and guaranteeings
-
Nov 06, 2019
- FSC Designates Additional Financial Solutions as 'Innovative Financial Services'
- The FSC designated seven additional financial solutions as ‘innovativefinancial services’ to be accepted into financial regulatory sandbox. As of November6, the FSC has designated a total of 60 such services.Overview of Newly Added ‘InnovativeFinancial Solutions’1. An online-based paperless application solution for business-relatedinsurance products, such as fire or disaster liability insurance (Samsung Fire MarineInsurance)2. An online payment service which allows buyers of used goods topre-charge e-points with their credit cards and transfer e-points to sellers asa means of payment when purchasing used goods directly from the seller in onlinee-commerce platform (KBKookmin Card)3. A monthly wage payment solution which uses mobile location datato log individuals’ work hours and allows workers to receive wages prior to themonthly payday through an escrow account (Emmaus)4. An automated intellectual property report solution which analyzesthe economic value of intellectual properties using big data and artificialintelligence, and forward the information to financial institutions (Wisdomain)56. An alternative credit evaluation service for individuals,business owners and SMEs, which utilizes non-financial information, such as profitrecords, types of business, number of days in operation and so on, to analyzeand provide alternative credit rating system for small businesses (BC Card, KB Kookmin Card)7. A small sum investment platform which allows individualinvestors to trade small amounts in foreign stocks and diversify portfolios (Korea Investment Securities)
-
Nov 05, 2019
