Specification of Savings Banks' Ancillary Businesses Not Requiring Approval Such as Promissory Note Issuance and Bancassurance

Financial Services Commission Approves Amendment to Mutual Savings Bank Business Supervision Regulations

[Asia Economy Reporter Kangwook Cho] In the future, savings banks will be able to conduct ancillary businesses such as sales and rental of computer systems, issuance of promissory notes, and bancassurance without separate approval from supervisory authorities. Additionally, ancillary businesses approved for Savings Bank A can also be conducted by Savings Bank B without undergoing a separate approval process.

The Financial Services Commission announced on the 18th that it has approved the amendment to the "Mutual Savings Banks Business Supervision Regulations" reflecting these changes.

According to the amendment, ancillary businesses approved for a specific savings bank can, in principle, be conducted by other savings banks without separate approval. However, this excludes cases where approval was granted under certain conditions such as capital adequacy, asset size, and management capability for the sake of management soundness and consumer protection.

Furthermore, to diversify savings banks' business operations and provide convenience to financial consumers, the supervisory regulations explicitly specify computer system sales and rentals related to savings banks, issuance of promissory notes, and bancassurance as businesses that can be conducted without separate approval.

Loans to borrowers subject to seizure measures such as provisional disposition or administrative disposition are now allowed to be classified as watch-listed loans, similar to provisional seizures. This is because early loan recovery can occur solely due to temporary or coercive seizures or provisional dispositions unrelated to the debtor's repayment ability, which has sometimes increased difficulties for self-employed individuals and other ordinary citizens.

The criteria for asset soundness classification adjustments for debt-adjusted loan claims have also been codified. When household loans of savings banks that have undergone debt adjustment are repaid faithfully, the asset soundness classification can be upgraded. Previously, specific soundness classification criteria were operated through administrative guidance.

The liquidity quantitative evaluation indicators in the management performance evaluation have been improved. Accordingly, among the liquidity evaluation indicators, the "actual available funds ratio" and "tangible asset ratio" have been removed, while the "loan-to-deposit ratio" has been newly introduced, similar to the banking sector, to encourage compliance with the loan-to-deposit ratio regulation introduced and implemented in the savings bank sector starting this year.

The Financial Services Commission stated, "With the approval of the amendment to the Mutual Savings Banks Business Supervision Regulations, we will promptly announce and implement it immediately."

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