Financial Sector Joins K-New Deal... Financial Authorities Also Deliberate Incentives and Risk Mitigation

"To Achieve Efficient K-New Deal Financial Support"…Active Discussions on the 22nd
Financial Authorities Also Prepare Measures Such as Allowing Long-Term Investment (10 Years), Selective Incentive Systems, and Investment Risk Mitigation

On the morning of the 22nd, Kim Jin-pyo, Chairman of the National Economic Advisory Council, is speaking at the 'K-New Deal Support Measures' meeting held at the Bank Federation Building in Myeongdong, Seoul. At this meeting, the chairpersons of the five major financial groups and heads of financial sector associations discussed matters related to the Korean New Deal project promoted by ruling party figures and the government. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Park Sun-mi] Voices from the financial sector are growing louder, calling for related incentives such as regulatory relaxation for participating institutions to ensure that investment funds released in the real estate market can lead to investment in the Korean version (K) of the New Deal.

At a meeting held on the 22nd, where heads of financial associations, chairpersons of the five major financial holding companies, financial authorities, and key ruling party officials gathered to discuss 'K-New Deal support measures,' attendees confirmed the financial sector's strong willingness to support New Deal projects.

However, opinions were raised that more concrete project discovery, such as the introduction of a government-level pilot project, should be prioritized for more efficient financial support. Additionally, it was suggested that the government should bear part of the risk of New Deal projects to reduce risk, and create conditions for more active private investment through tax benefits and easing of capital adequacy regulations.

The policy-type New Deal fund, where the government takes on investment risk first, will be newly established with a total scale of 20 trillion won over five years from this year to 2025, with a goal of raising up to 4 trillion won this year. Investment resources this year will be allocated considering policy priorities and the use of investment funds.

The financial authorities plan to support active participation of private capital in the New Deal fund. The Financial Services Commission has prepared measures such as ▲allowing long-term investment (10 years), ▲selective incentive systems like priority distribution of excess profits and priority loss compensation, and ▲risk mitigation to encourage private capital participation in the New Deal fund.

Kim Kwang-soo, Chairman of the Korea Federation of Banks, also focused on the difficulties faced by the financial sector participating in the K-New Deal during the support measures discussion meeting. Chairman Kim said, "When investing in startups, if risk-weighted assets (RWA) increase, the capital adequacy ratio based on the Bank for International Settlements (BIS) standards decreases. I proposed lowering the RWA standards so that more investments can be made with limited resources," adding, "There was also a tax-related proposal to lower tax rates if corporate shares are held long-term."

Meanwhile, the financial sector is establishing more concrete support plans based on the New Deal investment guidelines prepared last month, and full-scale loans and investments are expected to begin this year. Last year, the financial sector, centered on the five major financial holding companies, announced loan and investment plans totaling about 70 trillion won, thereby preparing K-New Deal financial support plans.

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