Six Financial Groups Including Samsung and Hyundai Motor to Implement 'Yurial Disclosure' in September

[Asia Economy Reporter Kim Hyo-jin] Integrated disclosure for risk management of six financial groups with assets exceeding 50 trillion won, including Samsung, Kyobo, Mirae Asset, Hanwha, Hyundai Motor, and DB, will be implemented in September.

From that time, these financial groups must collectively disclose detailed information regarding the group's ownership and governance structure, internal control systems, financial soundness, and internal transactions on the representative company's internet homepage.

The Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) announced on the afternoon of the 19th at the Government Seoul Office that they decided this at the Financial Group Supervisory Council chaired by Son Byung-du, Vice Chairman of the FSC.

The Financial Group Supervisory Council is a consultative body involving relevant departments of the FSC and FSS to ensure effective supervision of financial groups, based on the "Model Code for Supervision of Financial Groups." The financial authorities have been promoting the disclosure of specific management-related matters to prevent risks from some affiliates within financial groups from spreading to other financial affiliates and the entire group.

The scope of the integrated disclosure for financial groups includes the composition of the representative company's board of directors, principles and characteristics of governance, internal governance regulations, status of internal control standards within the group, deliberation and resolution status of internal control matters by the representative company's board, status and detailed guidelines of the group's risk management organizations, group's capital adequacy status, status of internal transactions within the group, status of investments and credit extensions to major shareholders and related parties, and status of financial accidents and non-performing loans, covering management and operational status of the group and its affiliates.

The disclosures will be made quarterly within three months after the end of each quarter, and annually within five months and 15 days after the end of the fiscal year.

Details of Integrated Financial Group Disclosure (Provided by the Financial Services Commission)

The financial authorities judged that existing management disclosures and business reports of financial companies reflect the status of individual financial companies, making it difficult to grasp the status at the group level collectively. Through integrated disclosure, the financial authorities plan to provide accurate information on the financial group's actual loss absorption capacity and induce improvement in the group's capital adequacy.

Accordingly, the financial authorities have established an "Internal Control Council" involving compliance officers of affiliated financial companies to enhance the level of internal control at the financial group level. Based on this, they plan to establish a compliance monitoring and internal control system at the financial group level in the second half of this year.

This includes ▲ declaration of the financial group's obligations for legal compliance and ethical management ▲ basis for establishing the financial group's Internal Control Council ▲ composition and roles of the financial group's Internal Control Council ▲ scope of application of standards ▲ common basic policies at the financial group level.

The financial authorities also plan to introduce a "Group Risk Assessment" within this year, which integrates the current contagion risk assessment and concentration risk assessment to comprehensively consider various group risks.

After finalizing detailed criteria for group risk assessment such as evaluation indicators, calculation methods for evaluation grades and weights for each item, and additional capital ratios, a simulated group risk assessment for the six financial groups will be conducted in the third quarter to evaluate the consistency of the revamped group risk assessment model.

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