Yoon Seok-heon, Financial Supervisory Service Chief: "Sanctions on Lime-selling Banks to Begin Around February Next Year"

"Dividend Reduction, Banks Will Be Inspected to Find Rational Measures"

Yoon Seok-heon, Governor of the Financial Supervisory Service (Source=Yonhap News)

[Asia Economy Reporter Seungseop Song] The Financial Supervisory Service's disciplinary procedures against Lime Asset Management fund-selling banks are expected to begin around February.

On the 7th, after delivering a congratulatory speech at the 'Diagnosis and Challenges of Corporate Sector Vulnerabilities' symposium held at the Korea Federation of Banks in Jung-gu, Seoul, Financial Supervisory Service Governor Yoon Seok-heon told reporters, "I think the bank sanctions will take a little more time," adding, "It will probably be around February."

Earlier last month, Governor Yoon had expressed the view that "(the disciplinary procedures against fund-selling banks) should ideally start within December."

The delay in the disciplinary procedures against Lime fund-selling banks is due to the postponement of preliminary procedures such as inspections of banks caused by the COVID-19 pandemic. Recently, with daily new confirmed cases exceeding 600, it has become difficult to proceed with normal disciplinary procedures.

Among the banks currently under disciplinary review, the three banks that sold Lime funds on a large scale are Woori, Shinhan, and Hana Bank. Although the sales volume is relatively small, Busan, Gyeongnam, NH Nonghyup, KDB Industrial Bank, and IBK Industrial Bank are also subject to review.

The Financial Supervisory Service usually sends advance notification letters to institutions under review 10 to 15 days before the disciplinary hearing, but no banks are known to have received such advance notifications so far.

Meanwhile, regarding the ongoing discussion about reducing dividends in the banking sector, Governor Yoon stated, "We plan to check whether (banks) have sufficient capacity through stress tests and cooperate to find a reasonably rational solution."

A stress test is a financial soundness evaluation that examines how well banks can withstand shocks under the COVID-19 situation.

The Financial Supervisory Service announced the day before that it is considering temporarily reducing dividends for individual banks due to the severity of COVID-19. The reason is the need to strengthen banks' ability to withstand economic uncertainties by reducing dividends.

In response to some criticisms that banks have accumulated sufficient reserves and therefore should be allowed to pay dividends, Governor Yoon replied, "We are currently comprehensively reviewing these factors, so we must first determine whether it is appropriate based on the analysis."

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