Designation as 'Financial Complex Corporate Group' for Assets Over 5 Trillion Won and Operation of Two or More Businesses

Legislative Notice for the Enforcement Decree of the Act on the Supervision of Financial Conglomerates

[Asia Economy Reporter Kwangho Lee] From now on, companies with total assets of 5 trillion won or more and engaged in two or more businesses will be designated as financial complex business groups. In addition, matters related to internal control and risk management of financial complex business groups will be specified. Capital adequacy standards that must be complied with to secure financial soundness will also be established.

On the 8th, the Financial Services Commission announced that the "Act on the Supervision of Financial Complex Business Groups," which includes these contents, will be enforced on June 30.

The FSC has prepared a draft enforcement decree that specifies the requirements for designation and cancellation of financial complex business groups, as well as soundness supervision standards, to ensure sound management of financial complex business groups.

From the 9th until the 19th of next month, a legislative notice on the draft enforcement decree will be conducted, and it plans to ensure that the enforcement decree and other subordinate regulations are implemented smoothly in line with the enforcement date of the law.

The main contents of the enforcement decree designate a financial complex business group if the total assets are 5 trillion won or more and the group operates in deposit-taking and lending business, financial investment business, insurance business, etc. However, if the total assets of non-core businesses are less than 5 trillion won, or if the assets of insolvent financial companies exceed 50% of the total assets of the financial complex business group, the group will be excluded from designation.

If the total assets of a group designated as a financial complex business group temporarily fall below the designation criteria, the designation will not be canceled within a three-year period to ensure legal stability.

In addition, matters related to internal control and risk management of financial complex business groups have been specified, and regular risk management evaluations are to be conducted.

The internal control standards include matters that must be complied with for sound management such as compliance with laws at the group level, and the risk management standards reflect specific procedures and methods for managing risks at the group level.

Furthermore, capital adequacy standards that financial complex business groups must comply with to secure financial soundness have been established. The actual loss absorption capacity (consolidated capital), considering the double use of capital, must be maintained above the minimum capital requirement (consolidated required capital) that takes into account additional risks at the group level.

Additionally, for internal transactions of 5 billion won or more, approval from the board of directors of the affiliated financial company must be obtained to closely monitor the impact of internal transactions on the soundness of the group.

An FSC official stated, "During the legislative notice period, we will faithfully collect opinions from stakeholders and, after going through related procedures such as regulatory and legislative reviews, we plan to submit the draft enforcement decree to the State Council."

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