Easing Management Evaluations for National Policy Banks and Financial Public Institutions... Profitability and Soundness Indicators Removed

[Asia Economy Reporter Jo Gang-wook] This year, profitability and soundness indicators will be removed from the management performance evaluation of policy banks and other financial public institutions. This measure is intended to mitigate potential disadvantages caused by deteriorating indicators due to the response to the novel coronavirus disease (COVID-19) crisis.

The Financial Services Commission announced on the 19th that it plans to ease potential disadvantages arising from the COVID-19 response in the "2020 Financial Public Institutions Management Performance Evaluation."

Accordingly, profitability indicators such as Return on Assets (ROA) and profit target achievement, which may worsen due to the COVID-19 response, as well as soundness indicators such as the Liquidity Coverage Ratio and Bank for International Settlements (BIS) ratio, will be excluded from the evaluation. Non-quantitative indicators that can assess efforts to implement government policies will be newly established.

The Financial Services Commission also decided to adjust budget execution policies to ensure that overtime pay for employees, incurred due to increased workload from the COVID-19 response by financial public institutions, can be paid smoothly. Overtime pay related to the COVID-19 response will be excluded from the calculation of the management performance evaluation indicator "total personnel expense growth rate (personnel expenses in the evaluation year - total personnel expenses in the previous year / total personnel expenses in the previous year)." For other public institutions under the Financial Services Commission's jurisdiction, such as the Korea Development Bank, Industrial Bank of Korea, and Export-Import Bank of Korea, this will be reflected in this year's financial public institution management performance evaluation, and for quasi-governmental institutions such as the Korea Credit Guarantee Fund, measures will be taken in consultation with relevant ministries.

The Financial Services Commission explained that this measure reflects concerns that, although active roles are required from financial public institutions to carry out emergency financial support programs related to COVID-19, the originally planned budget and management evaluation guidelines pose difficulties in performing these tasks.

The Financial Services Commission plans to revise and apply the 2020 financial public institution management performance evaluation guidelines this month for other public institutions under its jurisdiction, such as the Korea Development Bank, Industrial Bank of Korea, and Export-Import Bank of Korea, and will take measures in consultation with relevant ministries for quasi-governmental institutions such as the Korea Credit Guarantee Fund.

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