Eun Sung-soo: "Considering Full Authority of Financial Supervisory Service Chief for Severe Disciplinary Actions on Financial Company Executives" (Comprehensive)

"Innovative Finance: Opening Capital Flow as a Leading Company"

Eun Sung-soo, Chairman of the Financial Services Commission

[Asia Economy Reporter Kim Hyo-jin] Eun Sung-soo, Chairman of the Financial Services Commission, expressed on the 19th that he would "consider" the current system allowing the Financial Supervisory Service (FSS) Governor to unilaterally approve severe disciplinary sanctions against financial company executives.

At a press briefing held at the Government Seoul Office that morning regarding the FSC's work plan for this year, Chairman Eun responded to criticism that the FSS Governor's authority might be excessive by saying, "It is a very important matter."

He pointed out, "(The issue of sanctions against financial company executives) does not occur frequently, so it seems it has not been widely discussed."

He added cautiously, "I am careful to comment on this," and drew a line by saying, "I will think about it once, but this does not imply any particular direction."

The FSS Sanctions Review Committee last month resolved to impose severe disciplinary sanctions (official warning) restricting future employment in financial companies on Sohn Tae-seung, Chairman of Woori Financial Group (CEO of Woori Bank), and Ham Young-joo, Vice Chairman of Hana Financial Group, in connection with the overseas interest rate-linked derivative-linked fund (DLF) loss incident. This was effectively finalized with the approval of FSS Governor Yoon Seok-heon.

Along with this, the FSS Sanctions Review decided on fines and partial business suspensions for institutions such as Woori Bank and Hana Bank. Unlike sanctions against executives, sanctions against institutions must be confirmed through FSC resolution.

The FSC is expected to approve the sanctions on the 4th of next month. Afterward, when the FSS issues the inspection report, the sanctions against Chairman Sohn and other executives and the banks will take effect.

Meanwhile, Chairman Eun said on the same day, "(The first task for innovative finance) is to redirect the flow of funds toward companies."

To this end, Chairman Eun announced a plan to invest about 40 trillion won in innovative companies. He said, "This will help the sprouts of innovative companies to grow," and added, "We aim to create a trend that favors such companies."

Based on the real estate measures announced on December 16 last year and the introduction of a new loan-to-deposit ratio, the FSC reaffirmed its policy to block the concentration of funds into real estate and encourage financial companies to handle more corporate loans.

The FSC also plans to revise related systems to enable financing secured by various assets.

Accordingly, amendments to the Movable Property Security Act will be promoted, including the introduction of a blanket collateral system that allows various corporate assets such as machinery, raw materials, and inventory to be bundled and used as collateral at once. The establishment of a recovery support organization to purchase collateral and non-performing loans to alleviate financial companies' burden of fund recovery is also being pursued.

The FSC plans to enhance the reflection of technological capabilities in the loan screening process and support the evaluation of companies' competitiveness and creditworthiness using big data to assess companies based on technology and future growth potential.

Furthermore, the FSC intends to completely overhaul the indemnity system for financial company employees. The related procedures will be improved to ensure that if funds are supplied after a reasonable evaluation of companies, excessive responsibility will not be imposed even if problems arise.

This content was produced with the assistance of AI translation services.