Press Releases - Financial Services Commission

Press Releases

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Nov 22, 2016

Measures for Improvement of Derivatives Markets

The FSC announced a set of measures to make South Korea’s derivatives markets more advanced and sounder as this year marks the 20th anniversary of the establishment of derivatives markets in 1996. Key Points EXCHANGE-TRADED DERIVATIVES MARKETTo boost derivatives trading and enhance diversity of derivatives in the market, improvements will be made on both supply and demand sides. - Supply side: simplification of listing procedures, diversification of derivatives, adjustment of trading units for KOSPI200 futures and options - Demand side: flexible requirements for investors, introduction of the ‘omnibus account’ for foreign investors  OVER-THE-COUNTER(OTC) DERIVATIVES MARKETRisk management system will be established with the introduction of global regulatory standards such as margin requirements for non-centrally cleared derivatives and electronic trading platforms. DERIVATIVE-LINKED SECURITIES MARKETThe FSC will strengthen risk management and investor protection, while pursuing more diversification of products to meet various investment needs. - For ELS DLS markets, stress tests will be conducted on regular basis to strengthen risk management of securities firms. To enhance transparency in fund management, assets of ELS issuance and management will be separately managed. - Investor protection will be strengthened in ELS DLS markets with the introduction of tougher “Know-your-Product Rule” and a “cooling-off period” for investors. - Development and listings of more derivatives-linked products will be promoted as alternatives to ELS products. Detailed Measures1. EXCHANGE-TRADED DERIVATIVES MARKET Supply Side(1) Simplification of listing procedures Listings of derivatives linked to new underlying assets, which currently requires the FSC’s approval, will be streamlined. Relevant rules will be revised to allow the KRX to decide on the listings of new derivative products, while the FSC will only approve the scope of the underlying assets. (2) Di
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Nov 13, 2016

Seven Investors Were Picked to Buy Government's Stake in Woori Bank

*Please read the attached file for details.The government decided to sell its 29.7% stake in Woori Bank to seven investors on its fifth attempt to privatize Woori Bank since 2010. The seven final winning bidders and amount of shares auctioned to each bidder are as follows: Investors % of auctioned shares1 Eugene Asset Management 4.0%2 Hanwha Life Insurance Co., Ltd. 4.0%3 IMM Private Equity, Inc. 6.0%4 Kiwoom Securities Co., Ltd. 4.0%5 Korea Investment Securities Co., Ltd. 4.0%6 Mirae Asset Global Investments Co., Ltd. 3.7%7 Tongyang Life Insurance Co., Ltd. 4.0%The government would recoup KRW 2.4 trillion from this sale, recovering a total of KRW 10.6 trillion out of KRW 12.8 trillion, which is 83.4% of the public funds injected into Woori Bank. We will continue our effort to sell the remaining 21.4% in Woori Bank for a full recovery of the public funds. The sale will be closed in mid-December this year. The Korea Deposit Insurance Corporation (KDIC) will terminate its MOU with Woori, signed for helping normalizing the bank’s business operation, as soon as the sale is closed, to guarantee the new shareholders autonomy in the bank’s management.
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Nov 10, 2016

Short Selling and Disclosure Rules To Be Improved

The FSC outlined its plan to improve rules for short selling and disclosure to strengthen investor protection. Short Selling Rules1. Short sellers shorting during the period of paid-in capital increase will be barred from buying the newly-issued stocks. (Amendment proposal for the Financial Investment Services and Capital Markets Act will be submitted to the National Assembly in Q1 2017) 2. KRX will designate “overheated short-selling stocks” at the close for stocks showing extraordinary increases in short selling and sharp falls in prices during the trading hours to prohibit short-selling for those stocks on the following day. (The new rule will be implemented in early 2017 after KRX revised relevant regulations) 3. Sanctions against violation of short-selling rules will be strengthened. Those who breached short-selling rules such as prohibition of uncovered short- selling or up-tick rules will be subject to heftier fines than those imposed on other violations. (KRX will revise relevant regulation in Q1 2017)  Price manipulative activities exploiting short-selling positions will be added to types of ‘Market Disruptive Activities’ under the Financial Investment Services and Capital Markets Act. (Amendment proposal for the Financial Investment Services and Capital Markets Act will be submitted to the National Assembly in Q1 2017) 4. The deadlines for reporting and disclosure of short positions in large amounts or by shares will be shortened from the current T+3 days to T+2 days. (Relevant regulations to be implemented in Q4 2016) Disclosure Rules1. Deadlines for disclosure of technology transfer will be shortened to provide investors with timely information. (To be implemented Q4 2016)  Corrections to information of voluntary disclosure should be made by 6pm on the same day of such changes, earlier than the current deadline of the following day 6pm.  Among information currently subject to voluntary disclosure, important information that could affe
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Nov 09, 2016

FSC and FSS Holds Emergency Meeting on Financial Markets

FSC Chairman Yim Jong-Yong convened an emergency meeting on November 9 with top officials from the FSS and other relevant financial organizations to respond to recent uncertainties in financial markets due to the 2016 U.S. presidential election outcome. The recent market volatility is mainly attributed to a series of external factors and has little, if there is any, correlation with matters relating to Korea’s economic fundamentals. We ask domestic and foreign investors to act in a calm manner, and have faith in the resilience of our economy and the government’s determined commitment in stabilizing the financial markets. The FSC has been closely monitoring the financial market conditions since the emergency meeting held on November 7, Monday. The Korean government will always stay alert to further market developments.*Please read the attached file for details.
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Nov 07, 2016

FSC Holds Emergency Meeting on Financial Markets

FSC Chairman Yim Jong-Yong convened an emergency meeting with top officials from the FSS and other relevant financial organizations to respond to recent uncertainties in financial markets at home and abroad. Followings are key messages from his opening remark:  The Korean economy is now facing internal and external challenges with slump in exports; slow recovery in domestic consumption; and household and corporate debt risks. However, our economy has sound fiscal health and strong fundamentals to weather these challenges. The government maintains fiscal soundness with its debt-to-GDP ratio of 35.5% at the end of 2015, which is the 4th lowest among 31 OECD countries. South Korea has the world’s 7th largest foreign currency reserve. Its short-term external debt accounts for only 29% of the foreign currency reserve, as of the 2nd quarter of 2016, which is much lower than 74% at the end of 2008. The financial system is resilient enough in terms with capital adequacy and asset soundness of financial institutions.  The government will stay alert to internal and external uncertainties and take bold and preemptive measures, if necessary, to prevent any of risk factors from spilling over into a wider financial system to threaten our economy. Starting from today, the FSC and the FSS go into an emergency operation mode with a 24-hour monitoring on financial markets, in a close cooperation with the Ministry of Strategy and Finance, and the Bank of Korea. If necessary, we will take market stabilizing measures in accordance with contingency plans in a timely manner.  We will continue to respond to household and corporate debt risks in a preemptive manner. For household debt, the government will continue our effort to improve soundness of household debt by holding the principle of ‘debt should be borrowed within repayment ability and paid back in installments.’ We will also closely monitor and respond to rapid growth of household debt in non-banking sectors. For ong
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Sep 26, 2016

Preliminary Bidding Result for Sale of Woori Bank

Eighteen investors submitted letters of intent (LOI) to buy the government’s 30% minority stakes in Woori Bank in a preliminary bidding. The amount of stakes for which the investors bid adds up to 82 to 119 percent shares of Woori Bank. * The name of individual investors and amount of the bid each investor made cannot be disclosed upon their request.The investors who submitted LOIs will be given opportunity to conduct due diligence in end-September. Shortlisted bidders will submit final offers in mid-November to close the sale by the end of the year.Schedule - Sending Information Memorandums(IM) and conducting due diligence (Sept.30~)- Deadline for submission of final offers (5:00 p.m., Nov.11)- Announcement of winning bidder (Nov.14)- Signing of contract and payment (Nov. 28)* The schedule may be subject to change depending on progress in the sale process. *Please read the attached file for details.
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Sep 09, 2016

FSC Hold Emergency Meeting Following North Korea's Suspected Nuclear Test

FSC Chairman Yim Jong-Yong convened an emergency meeting to inspect risk factors in domestic financial markets and discuss responsive measures after a seismic event was detected in North Korea at 9:30 A.M. a supposed result of North Korea’s possible nuclear test.Stock market indices and won exchange rates are showing temporary volatility. However, the FSC sees it as a consequence of disappointed investor sentiment towards ECB’s holding key policy rates and increased speculative transactions, rather than the result of North Korea risk factors. North Korea’s past provocations had almost no direct impact on Korea’s financial markets, or if it had any, the shock was temporary and limited. Yet, the FSC will remain alerted and closely monitor financial market developments since the North’s provocative actions are intensifying and we cannot rule out the possibility that the consequential impact may last longer than we expect.The FSC will share related information with agencies related to domestic financial markets such as the Ministry of Strategy and Finance, Bank of Korea, and Financial Supervisory Service (FSS). The FSC and FSS will jointly form and operate an emergency team to more effectively monitor North Korea’s movements and financial market conditions. Moreover, we will review contingency plans to be fully prepared for future situations.*Please read the attached file for details
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Sep 06, 2016

Financial Assistance to be Provided for Hanjin Shipping's Local Contractors

The Financial Services Commission (FSC) and Financial Supervisory Service (FSS) came up with measures to support Hanjin Shipping’s local contractors in a bid to minimize spill-over effects of Hanjin’s filing into small local contractors. Current Situation of Hanjin Shippings’s contractorsTotal 457 subcontractors have receivables from Hanjin Shipping, which account to approximately KRW 64 billion as of end-June 2016. (as of end-June, 2016)Supportive Measures1. Government will provide financial assistance for subcontractorsThe government will swiftly provide emergency financial assistance for subcontractors and small-to-mid sized shippers. The Korea Development Bank (KDB), Industrial Bank of Korea (IBK), Korea Credit Guarantee Fund (KODIT), and Korea Technology Finance Corporation (KOTEC) will extend maturity for principal repayment of outstanding loans and guarantees by one year. The FSS will encourage commercial banks to grant grace period and extend maturity as well.The KODIT and KOTEC will provide special guarantees for subcontractors and small-to-mid sized shippers suffering from cargo delay. Up to 90% guarantee will be provided for debts of such companies and guarantee fee will be reduced by 0.2%. The guarantee will be provided by using the KRW 800 billion restructuring fund allocated in the supplementary budget. The KDB and IBK will offer emergency financial assistance to the subcontractors with temporary liquidity shortage. The KDB will grant loans worth KRW 5 billion to small-sized firms and KRW 7 billion to medium-sized ones. The IBK will provide KRW 300 million to SMEs at a rate discounted by 0.5%p. The KODIT and KOTEC will provide special guarantee with higher guarantee ratio (90%) and lower fee (↓0.2%) for SMEs whose corporate restructuring plan has been approved by the government under the Special Act on the Corporate Revitalization. The KDB will provide special loans worth total KRW 2 trillion to SMEs willing to restructure their business thr
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Sep 02, 2016

Follow-up Measures on Hanjin Shipping's Filing for Court Receivership

FSC Chairman Yim Jong-yong held a meeting on September 1 with the Korea Development Bank (KDB) and Hyundai Merchant Marine (HMM) to discuss follow-up measures regarding Hanjin Shipping’s filing for court receivership. Chairman Yim asked the KDB and HMM to exert their utmost concerted efforts to minimize problems with cargo delivery and shippers in the aftermath of Hanjin’s filing for bankruptcy protection. 1. HMM will immediately go into emergency management to minimize disorder in cargo delivery and damage to shippers. HMM will add to its sea routes the ones which used to be serviced exclusively by Hanjin Shipping – 1 in America, 1 in Europe – and start servicing of more than 13 additional ships as soon as possible. HMM will maintain freight rates for the newly-established routes to an appropriate level to ensure shippers should not face excessive increase in freight rates. 2. The Seoul Central District Court will soon determine whether to accept Hanjin Shipping’s filing, however, since we cannot completely rule out the possibility of Hanjin’s liquidation HMM will immediately form a task force to review its possible acquisition of Hanjin’s healthy assets. The TF will sort out and review Hanjin’s profitable vessels, overseas sales network and key work forces, and devise detailed plan to sell the assets to HMM. *Please read the attached file for details.
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Aug 31, 2016

FSC Statement on Hanjin Shipping's Filing for Court Receivership

FSC Vice Chairman Jeong Eun-bo held a meeting on August 31 with officials from relevant agencies to discuss the possible government’s responses following Hanjin Shipping’s decision to file for court receivership. 1. Impact on financial market will be limited.Hanjin’s filing for court receivership will have only limited impact on financial markets as the event has been already reflected to a considerable extent in the process of restructuring. In the stock market, Hanjin Shipping accounts for 0.03%, worth KRW 401 billion, of Kospi’s market capitalization. Its share price has declined 53.8% from KRW 3,540 per share on January 2 to KRW 1,635 on August 29, 2016. The impact on corporate bond market will be limited as credit ratings of Hanjin Shipping and Korean Air Lines already factored in the event. 2. Impact on financial institutions and corporate bond investors will be limited as well. Creditor banks have set aside loan loss provisions against most of possible losses. The additional amount of loan loss provisions the banks need is estimated to be KRW 0.3 trillion as Hanjin Shipping files for court receivership. The outstanding issuance of corporate bonds has continuously decreased in the restructuring process so far from KRW 2.2 trillion at end-2013, KRW 1.7 trillion at end-2014, KRW 0.8 trillion at end-2015, to KRW 0.5 trillion at end-June, 2016. Most of issued bonds are held by institutional investors. 3. The government will promote acquisition of Hanjin Shipping’s healthy assets by Hyundai Merchant Marine in a bid to maintain competitiveness of the shipping industryIn response to the market concern over the shipping sector, one of Korea’s key industries, the government will make sure to maintain the shipping industry’s competitiveness. Hyundai Merchant Marine (HMM) would acquire Hanjin Shipping’s core assets such as ships, overseas sales network and key work forces to retain Hanjin Shipping’s competitiveness as much as possible. 4. The government
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Aug 30, 2016

World's First Fintech Open Platform Launched to Ease Develoment of Innovative Fintech Services

Fintech Open Platform is launched in Korea for the first time in the world on August 30 in a bid to ease Fintech firms develop innovative financial services. Fintech Open Platform is a combination of a website where Fintech firms can download program commands used for development of Fintech services, and a physical space where they can run test operations of the programs they developed. Open API SystemOpen API system within Fintech Open Platform provides program commands needed when programming Fintech services with banking functions including money transfer and balance check in the form of standardized application programming interface (API). Until now, Fintech service developers had to sign separate contracts with each commercial banks in order to embed banking services in their programs. For example, even if a Fintech firm signed a contact with Bank A and launched a money transfer application linked with the bank, it had to sign different contracts with other banks separately because the program isn’t compatible with other banks. However, with the introduction of open API system, in order for a Fintech firm to develop a Fintech service with banking functions it simply has to download program commands which 16 commercial banks and 25 securities companies provide in a single unified format. For instance, a Fintech company can develop a housekeeping book application with bank balance check function just by downloading a balance check API from the open API system. As such, the launch of Fintech Open Platform will significantly reduce time consumed for developing Fintech services. Future PlanThe Korea Financial Telecommunications Clearings Institute and Koscom will provide virtual data and simulation environments for Fintech firms to run test operations of their Fintech services, and offer technology consulting services. The Financial Security Institute will ensure stability of Fintech services and financial consumer safety before the launch of the services.*Please
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Aug 26, 2016

Comprehensive Measures for Management of Household Debt

The government announced its new set of measures to manage the growth of household debt in a stable manner in response to the recent surge in household debt. As the recent growth of household debt are attributed to rapid increase of collective lending for home buyers and loans from the non-banking sector, the new package of measures mainly focuses on 1) curbing oversupply in the housing market; 2) tightening monitoring on collective lending for home buyers; and 3) strengthening risk management of non-banking sector loans.Key Points1. The new package of measures includes measures to address oversupply in the housing market as a way to manage household debt, while the previous measures so far were mainly focused on financial measures to improve the structure of household debt, boost household income and protect mid-to-low income households. 2. The government will strengthen its monitoring and management on collective lending, under relatively loose screening standards, given the unique characteristics of pre-sale scheme, in which the ownership of apartments is sold before they are built.  Guarantees for collective loans by Housing Finance Corporation (KHFC) and Korea Housing Urban Guarantee Corporation (KHUG) will be cut from 100% to 90% of the loan value; and the number of guarantees by the two institutions will be capped at two per borrower.  Under the new measure, banks will be required to strengthen monitoring and management risks in collective lending by securing borrowers’ income data and making on-site inspection on construction projects.  Low-and-middle-income borrowers will be granted favorable interest rates if they choose fixed-rate and amortizing loans when they make loans for middle payment for home purchase. 3. The government will also tighten monitoring and management on mortgages in the non-banking sector and commercial property-backed loans by applying tighter screening and improving loan repayment structures. The loan-to-value ratio for co
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Aug 22, 2016

Government Decides to Sell Its 30% Stake in Woori Bank to Multiple Buyers

The Public Fund Oversight Committee (PFOC) decided to sell the government’s 30% stake in Woori Bank to multiple buyers with an aim to close the deal by the end of this year. Since the PFOC announced its two-track approach in July 2015 , the government has been tapping demand for the both options. We found that it would be difficult to proceed with the plan of selling a controlling stake to a single buyer under the current market situation, while there is considerable potential demand for acquiring a smaller stake. As a result, the PFOC came to a conclusion that selling the government’s stake to multiple buyers in a smaller stake of 4 to 8% each is the best option to sell Woori Bank in a swift manner, while maximizing the recovery of public funds and contributing to further development of the financial industry. 1. (Shares for sale) 30% out of 48.09% owned by the Korea Deposit Insurance Corporation (KDIC) will be put up for sale2. (Minimum and maximum bidding volume) Minimum bidding volume is 4%, including the percentage of the shares bought in previously. The bidding volume cannot exceed 8%, excluding the previously-bought shares. However, under the Banking Act, non-financial companies must acquire FSC approval in order to buy a stake more than 4% and are not permitted to acquire a bank’s stake exceeding 10%.3. (Competitive auction) The bidding will proceed in competitive auction scheme. In principle, the shares will be sold to the highest bidders, however, the PFOC will take into account factors other than bidding price considering the winning shareholders’ potential influence on Woori Bank’s management. Further details of non-price factors will be decided by the PFOC.4. (Incentives for final bidders) A winning bidder who newly acquired more than 4% will be granted right to recommend one outside director. The PFOC will devise differentiated incentives for bidders depending on their bidding volume in order to encourage bidders to bid for a larger amount of
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Aug 02, 2016

Plan for Nurturing Mega-Investment Banks in Korea

The FSC announced its plan to nurture mega-investment banks(IBs) in Korea with equity capital of more than KRW10 trillion by allowing a broader range of new businesses for securities firms with a larger amount of equity capital. BACKGROUNDThe FSC introduced a scheme for ‘Comprehensive Financial Investment Business’ in 2013, in which a securities firm with equity capital of more than KRW3 trillion is permitted to engage in corporate lending. Since then, the securities industry has been still focused mainly on brokerage services and fell short of their IB activities to channel risk capital to innovative companies. Against this backdrop, the FSC outlined a plan to strengthen securities firms’ IB functions to enable them to provide more comprehensive financial services for businesses and boost their global competitiveness. KEY POINTS New financing channels will be allowed for securities firms to raise sufficient capital for corporate financing — e.g. issuance of promissory notes, introduction of an ‘Investment Management Account’ (IMA) to utilize a pool of customers’ deposit for investments. Regulatory amendments will be made to facilitate risk-underwriting activities by securities firms — e.g. separate NCR standards (NCR-II) to be applied to long-term corporate lending; securities firms to be allowed to lend companies up to 100% of their equity capital. Securities firms will be permitted an expanded business scope for corporate financing — e.g. internalization of order executions for unlisted company stock, foreign exchange operations, property-backed trust business, etc.  Cooperation between securities firms and policy banks will be strengthened to support their global activities in overseas investments and MAs.DIFFERENTIATED BUSINESS SCOPE DEPENDING ON EQUITY CAPITAL SIZEThe FSC differentiated the scope of new business allowed for securities firms according to their equity capital size, in an attempt to incentivize them to further boost
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Jun 24, 2016

FSC Meeting on Financial Market Stability after UK's Decision to Leave the EU

As it seems inevitable that the ‘Brexit’ decision would have short-term impact on financial market, financial authorities will respond in a swift and decisive manner to developments in financial markets. The government will monitor international and domestic financial market conditions around the clock while strengthening communication with global IBs and foreign media. The FSC/FSS will immediately form and operate a contingency response team led by the FSC Secretary General to strengthen monitoring and respond preemptively to possible volatility in financial markets. The government will also review its contingency plan to ensure that the detailed action plans are executed without any delay in case of abrupt financial market turmoil.In particular, the government will closely monitor domestic banks’ foreign currency liquidity conditions and make sure that they are well prepared to respond to market developments. The government views that the Korean economy is resilient enough to withstand possible impact of the Brexit decision on global financial market, given its strong economic fundamentals and financial soundness. * short-term external debt / total external debt: 43.1% (2009), 34.9% (2011), 26.4% (2013), 27.4%(2015) * short-term external debt / total foreign reserve: 52.0% (2009), 45.6% (2011), 32.3% (2013), 29.1% (2015) * current account surplus/ GDP: 3.7% (2009), 1.6% (2011), 6.2% (2013), 7.7% (2015) We ask investors not to overreact to temporary increase in financial market volatility and remain calm to future market developments from a mid-to long-term perspective with confidence in the Korean economy’s fundamentals. * Please read the attached file for details.
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Jun 16, 2016

Foreign Currency Liquidity Coverage Ratio (LCR) Will Apply to Banks from 2017

The FSC will introduce foreign currency liquidity coverage ratio (LCR) rule starting 2017, which requires commercial banks to hold 60% of their foreign exchange debt in high-quality liquid assets (HQLA) to withstand a 30-day net cash outflow in systemic risks. The FSC/FSS adopted the foreign currency LCR in 2015 as a guideline to monitor banks’ foreign exchange liquidity risks, in accordance with the Basel III recommendation. Since then, commercial banks have been advised to maintain the foreign currency LCR of at least 40% in 2015 and 50% in 2016. From next year, banks will be required to comply with the foreign currency LCR rule. - The foreign currency LCR rule will apply to all banks with the exception of:(i) commercial banks with foreign exchange debt of less than 5 % of their total debt and USD500 million or less in foreign exchange debt; (ii) Export-Import Bank of Korea (KEXIM); and (iii) branches of foreign banks operating in Korea. - The foreign currency LCR for commercial banks will be set at 60% in 2017, increased gradually to 70% in 2018 and 80% in 2019. * Specialized banks – IBK, Nonghyup Bank and Suhyup Bank – will be applied the foreigncurrency LCR of 40% in 2017, 60% in 2018 and 80% in 2019. * KDB will be subject to less stringent LCR requirement, given its special role as a state lender. (40% in 2017, 50% in 2018, 60% in 2019) - Banks will be required to calculate their foreign currency LCR each business day and maintain a monthly average of the ratios above the minimum requirement. - The ratio may be lowered by FSC approval for a temporary period of time in a crisis in order to prevent banks from reducing their foreign exchange liquidity provision. - Overlapping regulations – e.g. seven-day and one-month maturity mismatch ratio requirements, three-month foreign exchange liquidity requirement – will be abolished or replaced by the foreign currency LCR. For the next six months, the FSC will gather opinions from the banking sector about the p
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Jun 15, 2016

FSC Statement on Results of MSCI 2016 Market Classification Review

FSC Vice Chairman Jeong Eun-bo held a meeting on June 15 with officials from relevant agencies to discuss the government’s responses, following MSCI’s announcement of 2016 Market Classification Review. In its annual market review, MSCI announced that “Korea will not be included on the list for a potential reclassification to Developed status as part of the 2017 Review”, citing the following reasons: “the recent changes announced by the Financial Services Commission in South Korea will not take effect until 2017 and the investment frictions related to the lack of convertibility of the Korean Won and restrictions imposed by the local stock exchange on the use of exchange data for the creation of financial products remain unaddressed.” The Korean government’s stance on the MSCI requirementsThere exist some gaps between the extent of improvements that the government could make under our economic and market circumstances and the level of MSCI’s requirements, making it difficult for Korea to be included in the MSCI’s developed market index in the near future. Convertibility of the Korean Won MSCI has been asking the Korean government to allow offshore trading of the Korean won to address the lack of convertibility of the Korean won. However, we consider that currency market stability is an issue of critical importance to Korea, a small and open economy which highly relies on international trade. The Korean government seeks the internationalization of the Korean won but will move gradually, taking possible impact of currency market volatility on the Korean economy into consideration. In particular, allowing offshore trading of the Korean won is an issue that we cannot address in the short term since it would involve fundamental changes to our current forex management system. Use of KRX price data MSCI demanded that KRX should abolish immediately the “anti-competitive” clauses that require a separate contract for the use of KRX data for the purpose of
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Jun 08, 2016

Restructuring Plan for Shipping & Shipbuilding Industries and Measures for Recapitalization of Policy Banks

The government held a ministerial meeting chaired by Deputy Prime Minister to discuss restructuring plans for shipping shipbuilding industries and measures to boost capital at state-run banks to fund the restructuring. I. Restructuring of Shipping Shipbuilding Industries [1] Shipping Industry▪ Hyundai Merchant Marine (HMM) The creditor group agreed on the company’s debt restructuring proposal on condition that HMM would successfully conclude its negotiations with bond holders and shipowners; and HMM would join a shipping alliance. HMM already gained bond holders’ approval for its debt restructuring proposal; and is expected to conclude its negotiations with shipowners on its chartered rates by this week. The government plans to keep supporting HMM to join the Alliance. ▪ Hanjin Shipping Hanjin is now undergoing negotiations with 22 shipowners on charter rates and planning to meet with bond holders to restructure its debt. Hanjin is required to make its self-rescue efforts to secure liquidity as HMM did, while the government keeps supporting the company get back on track. [2] Shipbuilding Industry The ‘Big Three’ – Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding Marine Engineering – have prepared self-rescue plans in case of further slumps and economic downturn.▪ Hyundai Heavy Industries (HHI) HHI plans to raise KRW3.5 trillion by selling non-core assets, streamlining management and reshuffling businesses. Creditor banks evaluate that HHI’s self-rescue plan will be able to withstand further cuts in orders than current estimates. ▪ Samsung Heavy Industries (SHI) SHI prepared its self-rescue plan of KRW1.5 trillion including measures to secure liquidity such as issuance of asset-backed securities or paid-in capital increase. Although SHI’s self-rescue plan is relatively small in size, creditor banks view the plan is appropriate in that it includes the liquidity measures.▪ Daewoo Shipbuilding Marine Engineering (DSME)
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May 24, 2016

Test Operation of Omnibus Account

The FSC/FSS and relevant agencies will launch a test operation of ‘omnibus account’ starting from May 25 with four standing proxies, two securities firms and one global financial investment company. The test run is (i) to have foreign investors engage in devising detailed procedures; and (ii) to prevent technical errors in electronic and settlement system in advance of a full operation of the omnibus account system in 2017. The test operation will be proceeding in two stages: ▪ [stage 1] Mock Trading (May 25~Sept. 2016) Participants will process a whole procedure of order, settlement and ex-post reporting through a mock trading system to check detailed operation process and stability of electronic system. ▪ [stage 2] Real Trading (Sept. 2016~before an official operation scheduled in 2017) A limited number of participants including global investors who participated in mock trading will conduct real trading through an ‘omnibus account.’ The FSC/FSS will gather their suggestions in the process of the stage 2 and amend the system until the full operation in 2017. The FSC/FSS will reflect suggestions gathered from global investors in the process of the test operation into detailed procedures of the omnibus account system; and help more global investors participate in each stage of the test run. FREQUENTLY ASKED QUESTIONS ABOUT OMNIBUS ACCOUNT Test Operation of Omnibus Account1. Why are you conducting the test run through mock trading, not real trading? - Given the nature of an ‘omnibus account’ which enables a consolidated processing of trading orders and settlements from multiple investors, detailed settlement procedures may differ according to each financial institution. If the omnibus account were testes in real trading from the beginning, it might incur losses to investors accruing from settlement errors. - The test operation will be conducted through mock trading based on various scenarios to minimize any possibility of settlement errors. We are plan
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May 20, 2016

FSC Statement on HMM Negotiations

HMM and KDB are doing their best efforts to successfully conclude their negotiations with shipowners on charter rates. What matters is successful conclusion of the negotiations; therefore, the negotiations will be proceeding without being bound to a specific timeline. However, if the negotiations dragged on for so long, it would delay restructuring process of HMM. Therefore, we hope the negotiations will be concluded as soon as possible. In regard with prospect of the negotiation, the FSC is neither optimistic nor pessimistic. We are well aware that the negotiations are a complex and tough process; and that those involved are doing their best to reach a mutually desirable conclusion. If the negotiations failed, we regard that it would be practically difficult for HMM to get back on track. In this context, the negotiations now underway are very significant. If failed despite such efforts, there would be few options left for creditors to choose. The normalization of a business requires sharing of burdens among stakeholders. Adjusting charter rates to appropriate levels is essential for normalization of shipping companies; therefore, we look forward to consideration and cooperation from shipowners. * Please refer to the attached file for details.
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