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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
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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 27, 2007
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Aug 24, 2007
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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
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May 11, 2007
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Apr 05, 2007
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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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Mar 16, 2007
- Road Map for the Adoption of International Financial Reporting Standards
- The Financial Supervisory Commission held a ceremony together with Korea Accounting Institute on Thursday, March 15, to mark the announcement of the road map for the adoption of International Financial Reporting Standards (IFRS). Mr. Yoon Jeung-Hyun, Chairman of the FSC, gave the keynote address at the ceremony and noted that the road map marked a milestone in Korea’s embrace of global accounting standards. A number of dignitaries, including Sir David Tweedie, Chairman of the International Accounting Standards Board (IASB), and Mr. Tatsumi Yamada, a member of the IASB Board, also attended the ceremony to offer congratulatory remarks.Background of the IFRS road mapMuch progress has been made with the efforts to improve the accounting standards and strengthen the oversight of corporate financial reporting in the years following the 1997 financial crisis. But it has been generally assumed that the level of confidence of foreign investors and others in Korea’s corporate accounting has not matched the efforts undertaken thus far, in part because of accounting standards that differ from IFRS and other globally prevailing standards. With the globalization of capital markets and a growing need for accounting consistency worldwide, the road map the FSC announced on March 15 represents a major step forward that will significantly improve the comparability, the reliability, and the transparency of Korea’s corporate financial reporting in many meaningful ways.Outline of the IFRS road mapFinancial reporting under IFRS will be made mandatory for all listed companies.Simplified accounting procedures will be permitted for unlisted companies to avoid any undue compliance cost. Unlisted companies may also elect to issue financial statements under IFRS, but once IFRS is elected it may not be rescinded and replaced.Financial statements under IFRS may be reported beginning in 2009 (excluding financial service companies) and will be made mandatory for all listed companies beginning
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Mar 09, 2007
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Mar 05, 2007
- Asset-Liability Analysis of Domestic Banks: 2006
- An asset-liability analysis of domestic banks by the FSS shows bank assets totaled KRW1,191 trillion (average account balance basis) for 2006, up 11.0% or KRW118 trillion from KRW1,073 trillion for 2005. Loans and securities made up the bulk of the assets with the proportion of loans increasing from 67.6% to 68.3% and that of securities falling slightly from 21.6% to 20.9%. A 17.9% jump in loans to small-and medium-sized companies along with a 14.4% increase in housing loans during the year mostly accounted for the changes. On the liabilities side including equity, the proportion of deposits dropped from 53.4% a year earlier to 49.6%. The rest were mostly made up by debt issues (15.4%), borrowings (13.8%), and certificates of deposits (5.6%).An increase in loans and a drop in securitiesBank loans totaled KRW879.9 trillion, up 16.9% (KRW127.1 trillion) compared with 8.4% for 2005. In particular, loans to small- and medium-sized companies rose 17.9% (KRW45.9 trillion), a marked increase from 5.1% for 2005 and 2.6% for 2004. Household loans, led by housing loans, increased 13.5% (KRW40.8 trillion).Securities, on the other hand, rose 5.1% (KRW14.9 trillion) to KRW308.6 trillion, compared to 17.4% (KRW43.6 trillion) increase for 2005.Declining share of deposits as source of bank fundsThe source of funds for increased loans in 2006 came more from debt issues and CDs, which jumped by KRW38.0 trillion and KRW13.7 trillion, respectively, than from deposits. The proportion of deposits as a source of funds fell in 2006, as did in 2004 and 2005.In particular, as a result of the growth of CMA and other short-term, higher-yield products from non-banking financial institutions as alternatives to bank deposits, the proportion of demand deposits, savings deposits, and other low-interest deposits as a source of funds continued to drop in 2006.Continuing rise of loan-to-deposit ratioWith robust loans and sluggish deposits, the loan-to-deposit ratio of domestic banks showed a continued
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Feb 02, 2007
- New Disclosure Measures for Foreign Securities Issuers
- The Financial Supervisory Service announced several new measures it plans to adopt in order to fine-tune disclosure regulations on foreign securities issuers toward global standards amid growing interest among foreign companies to make public offerings or list in Korea. The FSS also plans to issue a new publication entitled “Guide to Stock Offering and Listing by Foreign Issuers” that explains the stock offering and listing processes and related regulations (in Korean).Regulations on public offering and listing by foreign issuers have been continually amended and fine-tuned to global standards since 2005. They include primary listing of foreign companies and foreign holding companies along with globally accepted listing standards (Dec. 23, 2005), exemption from mandatory IPO allotment (20%) to employee stock ownership plan (Feb. 15, 2006), mandatory designation of domestic agent for investor protection (Sept. 13, 2006), and simplified reporting format for foreign issuers (Jan. 24, 2007).New Disclosure Measures for Foreign IssuersThe FSS is planning to adopt several globally accepted investor protection measures in response to public stock offering plans by foreign entities that are incorporated as holding companies offshore in places such as Bermuda and Cayman islands.Disclosure on subsidiary unitsFinancial and non-financial disclosures are to be provided on a consolidated basis for the subsidiary units of offshore holding companies in order to ensure appropriate disclosures on the business activities of subsidiary units that effectively represent the activities of the holding company.Financial disclosures include financial statements and audit opinion from an independent external auditor. Non-financial disclosures include disclosures on key business activities, board of directors, affiliated companies, management makeup, and transactions with related parties.Disclosure on corporate governance structureDisclosures on the corporate governance structure of offshor
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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
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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.
