Press Releases - Financial Services Commission

Press Releases

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Nov 18, 2014

Korea's Reunification & Financial Policy Tasks

1. Historical Implication of Korea’s Reunification2. Current Status of North Korea’s Economy3. Financial Policy Task Upon Economic Integration4. Measures to Support NK Development5. Plan to Build Financial System for Stable Economic Integration6. Plan to Reform Financial System for Macroeconomic Stability7. Conclusion* Please note that this material is to encourage constructive discussion among academia, policy banks and financial institutions about Korea's reunification. This is not the Korean government's official stance at the moment, which needs further discussion in the future.* Please refer to the attached PDF.
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Oct 29, 2014

Plan to Improve Financial Holding Company System

BACKGROUNDKorea’s financial industry adopted financial holding company system in 2011 to maximize synergy among financial subsidiary companies. Since the introduction, financial holding companies have achieved notable growth and played a crucial role for the financial system. However, there are also skepticisms about the financial holding company system due to domestic financial holding companies’ low global competitiveness, asset and management structure centered by bank1, and instable governance structure.Nevertheless, financial holding company system is an effective mechanism to enhance financial industry’s competitiveness. The system creates synergies among subsidiary companies by preventing risk spillover to other financial companies2, easing MA and restructuring process, and enabling business connection among subsidiaries. Moreover, the financial holding company system enables subsidiary companies to provide one-stop financial services and expand business overseas which are expected to contribute to the development of the financial industry.To such backdrop, the Financial Services Commission plans to improve regulations and provide policy support to maximize effectiveness of the financial holding company system.DETAILED PLAN1. Ease regulations on holding concurrent positions by employees(Current) Global financial holding companies encourage heads of matrix organizations to hold concurrent positions to cover wider range of business strategy and operation. However, domestic financial holding companies have been applying strict regulations to employees related to holding multiple positions which makes them difficult to provide integrated financial services by collaborating business units.(After revision) The government will encourage financial holding companies to allow holding concurrent positions and ease related regulations. Possible negative impacts will be minimized through the Financial Supervisory Service’s stringent screening process. Positions th
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Oct 27, 2014

The Sales Process for Minority Shares in Woori Bank

The sales process for minority shares in Woori Bank has started with a public announcement made on October 27, 2014.The Korea Deposit Insurance Corporation put its 18% stake in Woori Bank for auction.Bidders are allowed to make bids for minority shares of between 0.4% and 10%.As an incentive to draw more tenders, winning bidders will be given call options of 0.5 shares per share. The KDIC will keep possession of approximately 9% of its share to pay out the call options. Investors can exercise their call options anytime within three years after one year since the issuance.With public announcement on the sale on October 27, the bid will be closed on November 28.Successful bidders will be selected and announced within December.*Please refer to the attached PDF for details.
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Sep 29, 2014

Plan to Improve Prudential Regulations on the Asset Management Industry

The FSC set out its plan to improve prudential regulations on the asset management industry. The plan includes the abolishment of the NCR rules and management evaluation and the reform of prompt corrective action scheme.DETAILED PLAN1. Replace the NCR with ‘minimum capital requirement’The net capital ratio(NCR) has been used as standards for prompt corrective action to asset management firms as well as securities firms since the rules were first introduced in April 1997. There have been, however, claims by market participants that the NC R rules are less effective to asset management companies as the NCR regime is better suit d to securities firms’ business model and environment.The FSC plans to replace the NCR rules with the ‘minimum capital requirement’. Asset management companies will be required to hold equity capital that exceeds the ‘minimum capital requirement.’The minimum capital requirement is the sum of ①regulatory capital requirement, ②capital requirement for client asset management, and ③capital requirement for proprietary investments.- (Regulatory capital requirement) An asset management company is required to meet the minimum capital requirement need to maintain its business license.- (Capital requirement for client asset management) An asset management company is required to accumulated reserve money in proportion to clients’ deposit to be used for compensations in case of clients’ damages.- (Capital requirement for proprietary investments) An asset management company is required to accumulate a certain proportion (e.g. 5~10%) of its proprietary investments in capital buffer against investment risks.2. Abolish management evaluationThe current management evaluation system will be abolished for the asset management industry. Instead, operational risk evaluation will be introduced to evaluate asset management companies’ internal control an d risk management. Evaluation results will be used only as reference for supervision, not
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Aug 26, 2014

Introduction of LCR under Basel III

Under the Basel III, Liquidity Coverage Ratio(LCR)* is set to be globally introduced starting from January 2015. The mini mum ratio begins at 60% in 2015 and will rise by 10%p per year to meet 100% in 2019.The FSC announced its plan to introduce LCR to banks operating in Korea.IMPLEMENTATION PLAN- (Domestic banks) Domestic banks are required to meet the minimum ratio of 100% starting from January 2015.- (Domestic branches of foreign banks) Domestic branches of foreign banks are also subject to the introduction of LCR to prepare for sudden liquidity outflows. The minimum ratio starts at 20% in 2015 and will gradually increase by 10% p a year to become 60% in 2019.- (Specialized banks/policy banks) The minimum ratio begins at 60% in 2015 and will rise 10% p a year to meet 100% in 2019.Banks will be allowed to maintain LCR below the minimum requirement when deemed necessary by the FSC such as a sudden liquidity crisis.SCHEDULEPreliminary announcement on the revision to the Regulation on Supervision of Banking Business will be made from August 27 to October 6, 2014. Revisions to the regulation will take into force after the approval of the Regulatory Reform Committee and FSC.*Please refer tothe attached file for details.
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Aug 25, 2014

Action Plan to Promote Creative Finance

The FSC set out a set of action plan to promote ‘creative finance’: ①facilitate technology finance to reach out to lenders and businesses announced; ②foster venture capital markets to finance start-ups and venture businesses; and ③cultivate innovation-friendly culture in the financial sectorBACKGROUNDThe paradigm shift to ‘creative economy’ calls for a new role of finance as well. The FSC has been pushing forward ‘creative finance’ as a means to channel funds to star t-ups and venture companies with creative ideas and innovative technology.The FSC has laid the foundation for ‘creative finance’ and made initial achievements.- (Infrastructure for technology finance) Technology data base(TDB) was established(July 2014) to gather about 4 million pieces of tech-related information which used to spread across 32 institutions and to provide financial institutions with such information. Three technology credit bureaus(TCBs) were designated for rating technology that businesses own.- (Revitalization of venture capital market) KONEX, a stock market for SMEs, was launched in July 2013. The ‘Growth Ladder Fund’ was formed to finance start-up businesses with an aim to raise a total of 6 trillion won for three years.- (Financial regulatory reform) All-out financial regulatory reform is underway to promote competitiveness and innovation in the financial sector.Based on such initial achievements, the FSC came up with action plan to make these policy achievements of ‘creative finance’ reach out those targeted e.g. tech start-ups, banks, and market participants, etc.ACTION PLAN TO PROMOTE ‘CREATIVE FINANCE’1. Facilitate technology financeThe FSC will build momentum in channeling funds to start-ups and tech firms by offering banks strong incentive for credit loans based on tech credit ratings, not just on conventional collateral and guarantees. The Korea Development Bank(KDB) and the Industrial Bank of Korea(IBK) will increase the volume of ‘technol
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Jul 15, 2014

Plan to Improve License System for Financial Investment Business

The FSC announced its plan to ease regulations on license system for financial investment business, which includes integrating business units for license, currently overly subdivided, and simplifying license process.KEY DIRECTION1. Improve License System for Financial Investment BusinessIn principle, financial investment businesses will be required to apply for a business license for only when it first enters the sector. The number of business units for regulatory approval will be cut from the current 42 to 13(see the table below). Once a financial institution is granted a regulatory approval for business(①~⑬), the company will be allowed to add new business within the same sector simply through add-on registration, without any additional procedure for approval.How business units for regulatory approval will change* Please refer tothe chartin the attached PDF. Regulations regarding majority shareholders will be also revised. - (Current) Person not allowed to participate in business management due to spinoff is classified as a “specially related person” under the Financial Investment Business and Capital Markets Act(FSCMA ), which unreasonably restricts such person from becoming a major shareholder. - (Revision) If the Fair Trade Commission confirms the person not participating in management due to spinoff, the person will not be classified as a “specially related person”. - (Current) A financial firm issued with sanctions equal to or stronger than institutional warning within the ‘recent three years’ is banned from becoming a largest shareholder of a financial investment company. - (Revision) For institutional warning, the period will be shortened to from the current three years to the recent one year.Other procedural regulations on license or registration will be eased or improved. - (Current) Under the current practice, a financial investment company issued with sanctions equal to or stronger than institutional warning is suspended from applying fo
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Jul 10, 2014

FSC Announced Its Plan for Financial Regulatory Reform

BACKGROUNDThe FSC announced its plan for financial regulatory reform to create new opportunities and growth drivers for Korea’s financial industry and economy.The global financial industry stands at a crossroads between decline in growth and another takeoff in the aftermath of the global financial crisis. Korea’s financial industry also has difficulties in seeking for clear vision, developing new profit models, and restoring public trust in the financial sector. The financial sector is now called for reinventing itself to support the real economy, to generate high-added value, and to bring more satisfactory services to financial consumers.The FSC identified both statutory and implicit regulations which constrained the growth of the financial industry. Since March 2014, we held dozens of meetings with stakeholders – e.g. financial institutions, consumers, etc. – and conducted a survey of stakeholders to get their views on existing regulations and recommendations for improvement. We also conducted a series of reviews on a total of 3,100 financial regulations, 1,700 regulations of which were shortlisted for further reviews. Out of them, 700 regulations were finally chosen to be reformed.KEY DIRECTION FOR FINANCIAL REGULATORY REFORM1. Build a financial regulatory system for ‘better regulation’A two-track approach will be taken for financial regulatory system: 1) a rule-based approach for regulations needed to maintain systemic stability, protect financial consumers, and ensure personal data security; and 2) a principle-based approach for regulations on approving financial institution s’ entrance into business, sales channel and business operation.2. Strengthen support for the real economy and reduce financial consumers’ inconvenienceRegulations on corporate lending, guarantee, and listing will be improved to facilitate the technology credit bureau(TCB) system. For financial consumers, excessive document requirement will be eased to enhance access to fina
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Jun 23, 2014

Privatization Plan for Woori Bank

The Public Funds Oversight Committee deliberated and approved on June 23 the privatization plan for Woori Bank.BASIC DIRECTIONWoori Financial Holdings will be merged with Woori Bank. The Korea Deposit Insurance Corporation(KDIC) will then sell its entire 56.97% stake in Woori Bank. The stake will be put up for two-track sales to proceed separately but simultaneously: sale of a controlling 30% stake and sale of the remaining minority shares.DETAILED PLAN1. SALE OF CONTROLLING STAKEOut of KDIC’s 56.97% stake in Woori Bank, the controlling 30% will be s old to a single buyer who seeks management rights of the bank. The shares will be sold according to general MA procedure.2. SALE OF MINORITY SHARESThe remaining 26.97% will be put up for auction for investors seeking investment returns. Bidders are allowed to make b ids for minority shares of between 0.5% and 10%. As an incentive to draw more tenders, winning bidders will be given call options - e.g. 0.5 shares per share – for the stake they won. The sale process will proceed in a swift manner skipping preliminary bidding and price adjustment.SCHEDULEPublic announcement on the sale will be made in September. The bids will be closed at the end of November. Final bidders for the controlling stake and winning bidders for minority shares are expected to be selected by the end of 2014.* Please read the attached file for details.
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Jun 19, 2014

Implementation Rules for the Korea-US Tax Information Exchange Agreement

The FSC approved today the Implementation Rules for the Korea-U.S. Tax Information Exchange Agreement, which will be implemented from July 1, 2014. The purpose of the rules is to provide a clear guideline with Korean financial institutions that come under reporting obligation of the Foreign Account Tax Compliance Act(FATCA) in order to relieve their compliance burden.BACKGROUND: WHAT IS FATCAThe Foreign Account Tax Compliance Act(FATCA) was enacted in 2010 to target tax non-compliance by U.S. taxpayers with foreign accounts. FATCA requires foreign financial institutions(FFIs) to report to the Internal Revenue Service(IRS) information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. Non-compliant FFIs face a 30% withholding tax on certain U.S.-source payments made to them.Governments around the world are signing intergovernmental agreements with the U.S. government to ease burden of their domestic financial institutions under FA TCA reporting obligation. Korea singed a bilateral agreement with the U.S. in March 2014 on automatic exchange of tax information. Under the bilateral tax deal, financial institutions are required to report their own country’s tax authorities – the National Tax Service(NTS) for Korean financial firms and the IRS for U.S. firms – information about their clients’ financial accounts. The NTS and the IRS will exchange such information in every September starting from 2015.KEY CONTENTS OF THE IMPLEMENTATION RULES1. Financial institutions and financial accounts subject to FATCA reporting obligation- (FINANCIAL INSTITUTIONS)* depository institutions (e.g. banks, savings banks), custodial institutions (e.g. securities firms), investment entities (e.g. private equity funds), insurers * Reporting requirement is relieved for certain small financial institutions and local financial firms whose customer base is primarily local.- (FINANCIAL ACCOUNTS) depository ac
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Jun 18, 2014

FSC Roadmap for Further Development of Korea's Derivatives Market

OVERVIEWThe FSC announced its roadmap for further development of Korea’s derivatives market. The plan has set a clear goal and regulatory principle tailored to each type of derivatives market as follows:- Exchange-traded derivatives market will be developed into a risk-managed market with focus on professional investors through greater autonomy in the market and creation of new markets.- Over-the-counter derivatives market will be grown into a more transparent market with lower trading risk by phasing in central counterparty(CCP) and introducing trade repository (TR) systems.- Derivatives-linked securities market will be fostered into a sound investment market for retail investors by providing more diversified products and making it easier for investors compare and choose products.EXCHANGE-TRADED DERIVATIVES MARKETS[MARKET AUTONOMY]1. Greater autonomy in market operationMarkets will be granted greater autonomy under the condition that it would not undermine stable operation of the markets and investor protection. Details related with market operation such as quotation price units or exercise price of options will be deliberate d and decided by a derivatives market committee within the KRX.Currently, the items of underlying assets for individual equity futures and options are specified by the Derivatives Market Business Regulation of the KRX. The Regulation will be revised to allow automatic listings of equities that meet certain requirements as underlying assets.2. Introduction of new derivatives marketsThe exchange-traded derivatives market has been strictly limited with only 15 products listed on the KRX, while 1,303 products traded on CME in the U.S., 274 on Eurex in Germany and 100 in Japan.Reflecting the trading volume of spot transactions, the FSC will actively introduce new derivatives markets in high demand such as V-KOSPI 200 futures, sector index futures and night time trading of US dollar futures, which will provide professional investors with an instru
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Apr 18, 2014

Enactment of the Regulation on Supervision of Covered Bond Issuance

The FSC approved a draft regulation on Supervision of Covered Bond Issuance, completing a legal framework for covered bond issuance. The Regulation on Supervision of Covered Bond Issuance is enacted to stipulate further details mandated by the Covered Bond Act and its Enforcement Decree.1. Specify qualifications of underlying assetsHome mortgage loans in underlying assets need to be composed of at least 20% of loans with a debt-to-income (DTI) ratio 70% or lower in a bid to contribute to improving structural soundness of household debt. Out of home mortgage loans in underlying assets, fixed-rate loans must account for more than 30%, by which banks would be pushed toward extending more fixed-rate loans.2. Establish standards for evaluation of underlying assetsIn principle, underlying assets in a cover pool are to be evaluated by market prices. In the absence of such prices, the assents can be evaluated by book value computed by international accounting standards. These are to guarantee objective valuations of collateral assets, which will enhance investors’ confidence.3. Require market-making roles of underwritersIssuers are required to register their underwriters’ market-making roles when they file their issuance plan. The requirement is to encourage underwriters to play market-making roles such as offering quotations upon investors’ requests for a certain period of time after the issuance of covered bonds.The Regulation on Supervision of Covered Bond Issuance will take effect on April 23, 2014.*Please refer tothe attachedPDF for details.
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Apr 09, 2014

FSC Plans to Overhaul NCR Rules for Securities Companies

BACKGROUNDThe net capital ratio (NCR) has been serving as a key index to assess financial soundness of securities firms since it was first introduced in April 1997. The NCR has been widely used as standards for financial authorities to take prompt corrective actions, grant membership of KRX, or evaluate primary dealers.However, it has been pointed out that the current NCR rules no longer reflect changes in securities market and business model. The current NCR rules, mainly focused on regulating brokerage business in domestic market, restrict security firms from engaging in investment banking business or expanding into overseas markets. With the current method of computing NCR, it is difficult to exactly evaluate securities firms’ financial soundness or loss absorbing capacity.Against this backdrop, the FS C plans to overhaul net capital ratio (NCR) rules for securities companies, as part of its effort s to revitalize the country’s capital markets.KEY CONTENTS1. Modification to the NCR formulaCurrently, the NCR is calculated as a percentage of net operating capital to gross risks. Net Capital Ratio (%) = (net operating capital/grossrisks) × 100 Under the current formula, however, securities firms are forced to hold unnecessarily excessive capital. Securities companies are needed to secure an additional amount of net operating capital, bigger than the increased amount of risks, to maintain the same level of NCR. The current NCR makes investors difficult to figure out amounts of net equity capital of securities firms, leading the m to the misperception that higher NCR means the better financial soundness.The FSC plans to modify the NCR formula as follows: (net operating capital – gross risks)/ sum of equity capital required to maintain each business unit’s licenseThresholds for corrective actions will be adjusted to corresponding to the modification to the NCR formula.Securities companies will be allowed to choose which formula they would use until the end of
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Apr 08, 2014

Enforcement Decree of the Covered Bond Act Approved at Cabinet Meeting

The Enforcement Decree of the Covered Bond Act was approved by the Cabinet today to come into force starting from April 15, 2014. The Enforcement Decree is to stipulate details mandated by the Covered Bond Act such as qualifications for cover assets, evaluation basis and issuance cap.KEY CONTENTS OF THE COV ERED BOND ACT AND ENFORCEMENT DECREE1. Eligible issuersFinancial institutions are required to meet both institutional and eligibility requirements to issue covered bonds.- (institutional requirement) banks, Korea Housing Finance Corporation, Korea Finance Corporation, and other equivalent institutions designated by Enforcement Decree- (eligibility requirement) a financial institution with equity capital of more than KRW 100 billion, a BIS ratio of more than 10%, and risk management system2. Cover PoolThe minimum ratio of collateralization is 105%. Underlying assets in a cover pool need to be evaluated by market prices if there are credible market prices as a reference price. In the absence of market prices, the assets can be evaluated by book value or acquisition prices.- (underlying assets) home mortgage loans, public bonds, ship and aircraft mortgages, high-quality assets with a stable cash flow- (liquid assets) cash, CDs, liquid assets converted into cash within three months- (other assets) recovery from underlying assets, gains earned through management, operation and sales of assets3. Issuance CapCovered bond issuance is limited to 4% of the issuer’s total assets.* Please refer tothe attached PDF for details.
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Apr 03, 2014

Mandatory Use of Accredited Certificate To Be Lifted for Online Payments with Debit & Credit Cards

The FSC and the FSS will revise the ‘Detailed Enforcement Rules of Regulation on Supervision of Electronic Financial Transactions Act’ that require online shoppers to mandatorily use accredited certificate when they make online payments worth more than KRW300,000.With the revision, consumers would be able to shop online without accredited certificate when the payments are made by either debit or credit cards. For online money transfers, accredited certificate will be still required for payments worth more than KRW 300,000.The revised rules will be enforced within June this year after the remaining procedures for revision are completed.* Please refer to the attached PDF for details.
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Mar 28, 2014

One-Year Achievements of the Happiness Fund

KEY ACHIEVEMENTSAs of March 2014, the Happiness Fund has supported debt restructuring of 249,000 debtors, out of a total of 294,000 applicants since its launch on March 29, 2013. For the last one year, the Happiness Fund has reached out to 294,000 debtors, 3.8 times more than the initially targeted number of 65,000 a year.Out of the 249,000 debtors, the Happiness Fund purchased debts of 168,000 borrowers from financial institutions since its launch. Debts of the remaining 81,000 were taken over from public asset management companies (AMCs).The 168,000 debtors were written off 51.8% of their debts, KRW0.9 trillion out of a total of KRW1.8 trillion (principal only), which is equivalent to write-offs of KRW5.73 million per person.The Happiness Fund helped those in debt restructuring program find jobs so that they could repay their debts on their own.From April 1 last year to March 24 this year, a total of 48,000 borrowers switch their high-interest loans to lower-interest ones with 10% or higher, which lowered their burden of interest payments by KRW 8.93 million.FUTURE PLANThe Happiness Fund plans to purchase student loans with the passage of the Korea Student Aid Foundation (KOSAF) Act, now pending in the National Assembly.The FSC will also make effort to launch an integrated system as soon as possible to manage and coordinate microfinance programs.* Pleaserefer tothe attachedPDF for details.
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Mar 11, 2014

Comprehensive Measures to Protect Personal Data in the Financial Sector

OVERVIEWThe FSC and relevant ministries jointly announced a package of measures to prevent a recurrence of personal data leaks in the financial sector, as part of the government’s follow-up measures to ensure market discipline under its three-year plan for Korea’s economic innovation.The measures announced today were drawn up based on the following basic principles, further developing a series of measures previously announced since the data leakage from the three credit card companies were revealed last January. 1. Financial firms will be asked a greater responsibility in handling their customers’ personal data at each stage that they collect, retain, use and discard customers’ information. 2. Financial consumers’ right to their personal information will be ensured so that they can decide for what, when and how their own personal data are being used by financial firms. 3. Financial firms will be held more accountable for personal data protection and strictly sanctioned in the event of personal data security breach. 4. Cyber security measures will be strengthened across the financial sector in response to cyber crimes such as hacking. 5. The government will make sure financial consumers’ personal data previously provided or illegally-circulated not to be misused by financial scammers.1. STRENGTHEN PERSONAL DATA PROTECTION AT EACH STAGE THAT FINANCIAL FIRMS COLLECT, RETAIN USE A ND DISCARD CUSTOMERS’DATAFinancial firms will be asked a greater responsibility in handling their customers’ personal data at each stage that they collect, retain, use and discard such information .‘COLLECT’ STAGEFinancial firms will be allowed to collect necessary information at a minim um level from their customers. Currently, financial firms are collecting 30 to 50 items of information from their customers. The list of collected information will be shorted up to 6 items necessarily required for financial transactions.3Additional information should be collected only with
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Feb 27, 2014

Measures to Improve Structural Soundness of Household Debt

BACKGROUNDAs of the end of 2013, Korea’s household debt amounted to KRW 1,021 trillion. The government has been taking a series of measures so far to improve the quality of household loan and to rein in the pace of household debt growth. As a result, the government significantly lowered a possibility that household debt issue might be worsened into a systemic risk.Morgan Stanley(Oct. 2013) evaluated that Korea’s household debt risk is manageable, citing grounds such as financially stable structure of household assets and mortgage rules on loan-to-value(LTV) and debt-to-income(DTI) ratios. The IMF stress test result (Jan. 2014) also shows Korea’s household debt has a low possibility to pose a systemic risk in the event of economic shock.Despite such achievement, the household debt issue still exposes vulnerability in some parts. The share of floating-rate and interest-only mortgages remains high. Low-income households’ ability to repay debt deteriorated.The FSC and relevant ministries jointly announced today a package of measures to improve the structural soundness of household debt, as part of the government’s follow-up measures to push forward the three-year plan for the next phase of Korea’s economic growth.KEY CONTENTS1. The government will set the ratio of households’ debt to income as a key target indicator in managing household debt and lower the ratio by 5%p until the end of 2017.2. The government will set new targets for banks to increase the proportion of fixed-rate and amortizing loans out of total mortgages, up to 40% by the end of 2017.3. The government will prompt banks to offer a variety of loans tailored to consumers’ debt repayment ability such as loans with a cap on floating rates or loans amortized over a mid-term maturity, for example, 5 to 10 years.4. Borrowers with fixed-rate and amortizing loans will be granted a bigger tax exemption up to KRW 18 million, up from the current ceiling of KRW 15 million. For loans with a long-term
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Feb 20, 2014

Financial Policy Direction for the Year of 2014

KEY POINTS- Establish a specialized IT security agency for the financial sector- Abolish financial regulations that hinder sound competition in financial markets- Develop new pension products tailored to various consumer needs- Establish a special agency to provide guarantee for the shipping industry- Stimulate PEF industry- Establish a technology credit bureau (TCB)- Conduct annual survey on public awareness of financial policyOVERVIEWThe FSC announced its financial policy direction for the year of 2014 in pursuit of Korea’s financial service industry more trustworthy and globally competitive.In 2013, the FSC achieved its policy goals such as protecting financially-marginalized individuals and laying a foundation for creative finance. A recent string of financial incidents, however, undermined public trust in the financial sector. It has become essential to restore the trust.‘Public trust’, ‘market confidence’ and ‘consumer satisfaction’ are three pillars under which the FSC will push forward its financial policy throughout this year. The FSC set three policy goals: (a) establish market discipline in financial markets; (b) secure stability in financial system; and (c) strengthen financial industry’s competitiveness.KEY CONTENTS1. ESTABLISH A SPECIALIZED IT SECURITY AGENCY FOR THE FINANCIAL SECTORA specialized IT security agency will be established to better protect financial consumers against rapidly evolving methods of financial fraud. Currently, IT security functions are carried out separately by the Financial Security Agency(FSA), the Korea Financial Telecommunication Clearing Institute(KFTC) and KOSCOM. Some functions will be transferred to the new agency to provide financial institutions with a total package of specialized IT security service.The new agency will serve as an integrated control for IT security, responsible for a whole process of monitoring, security alert, analysis and response in the event of IT security breach in all financial
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Feb 04, 2014

Follow-up Measures on Telemarketing Ban

BACKGROUNDThe FSC temporarily banned (Jan.24) financial firms from selling their products by phone, SMS or e-mail until the end of March in order to protect financial consumers from any possible financial scam using illegally-circulated personal data.Since then financial firms are conducting self-inspections due February 14 on their data security to submit a report to the FSS. Based on the result, the FSS plans to inspect financial firms deemed vulnerable to da ta breach in March.FOLLOW-UP MEASURESThe FSC will thoroughly examine whether personal data held by financial firms are all obtained legitimately in order to ease financial consumers’ concern about possible financial fraud, while lifting the temporary ban on telemarketing as soon as the legitimacy is confirmed in a bid to ensure job security of telemarketers.□ TelemarketingInsurance companies are required to submit their CEOs’ confirmation to the FSS by February 7 that ensures personal data used for telemarketing is obtained legitimately from customers. After the FSS review the report, insurers will be allowed to resume telemarketing as early as late next week. If the confirmation submitted by insurers is found to be opposed to facts, the insurers will be faced with strict sanctions.General agencies and card companies will be also allowed to resume telemarketing, presumably at the end of February, as soon as the FSS confirms that person al data used for such marketing activities are legitimately obtained.□ Sales activities by SMS or e-mailFinancial firms will be allowed to sell their products by SMS or e-mail as soon as the FSS confirms the legitimacy of data collection and use and introduce relevant guidelines around the end of March. The FSS will offer financial firms guidelines on strict internal control and compliance procedure about customer data protection.* Please refer to the attached PDF for details.
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