Management Status of Six Financial Groups Including Samsung and Hyundai Motor to Be Disclosed in First Integrated Report by End of This Month

Disclosure Completion by the 29th

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[Asia Economy Reporter Kim Hyo-jin] Integrated disclosures for six complex financial groups including Samsung, Hyundai Motor, Hanwha, Mirae Asset, Kyobo, and DB will be conducted for the first time this month.

The Financial Services Commission and the Financial Supervisory Service announced on the 16th that, in accordance with the "Financial Group Supervision Best Practices," disclosures covering 25 items across eight areas such as ownership and governance structure, internal control and risk management systems, financial soundness, and internal transactions will be conducted from the end of this month for these groups.

The financial authorities plan to complete all disclosures by the 29th, although the schedule may vary slightly by group. Annual disclosures as of the end of last year and quarterly disclosures for the first and second quarters of this year will both be conducted.

The financial authorities initially planned to conduct the first disclosure in June but adjusted the timing considering the preparation time required by the companies and the workload impact due to the COVID-19 pandemic.

The integrated disclosure covers the composition of the board of directors of the representative company, 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 of group risk management organizations and detailed guidelines, group capital adequacy status, status of internal transactions within the group, status of investments and credit extensions to major shareholders and related parties, status of financial accidents and non-performing loans, and other management and operational statuses of the group and its affiliates.

Going forward, quarterly disclosures must be made within three months from the end of each quarter, and annual disclosures (fourth quarter) must be made within five months and 15 days.

The current best practices designate as supervision targets non-holding complex financial groups with financial assets of 5 trillion won or more that operate two or more businesses among deposit-taking, insurance, and financial investment, where the necessity is recognized.

Supervised financial groups must select a representative company within the group, and the representative company must carry out soundness-related tasks such as establishing risk management policies. This is intended to prevent issues in non-financial affiliates within the group from spreading to financial affiliates and adversely affecting overall financial soundness. Financial holding companies are managed and supervised by authorities under the Financial Holding Companies Act.

The best practices were approved by the Cabinet last month and will be legislated as early as this year through the "Financial Group Supervision Act" bill submitted by the financial authorities to the National Assembly. This will provide a legal basis for the financial authorities' risk assessments and related improvement measures.

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

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