Jeong Eun-bo: "Reorganizing FSC Inspection Duties from Post-Punishment to Preventive Measures"

Jeong Financial Supervisory Service Chief - Financial Holding Company Chairman Hold Meeting for 3 Days
Discuss Financial Supervisory Service Inspection System Reform and Financial Holding Support Measures

Jeong Eun-bo, Governor of the Financial Supervisory Service, is attending the National Assembly's inspection of the Financial Services Commission held by the National Assembly's Political Affairs Committee on the 21st, responding to questions from lawmakers. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Jin-ho Kim] The Financial Supervisory Service's (FSS) inspection tasks will be reorganized to focus more on proactive risk identification and preventive measures rather than the current ex-post punishment-centered approach. Additionally, restrictions on information sharing within financial holding companies will be eased to enhance their competitiveness, and banks' liquidity coverage ratio calculations will be progressively improved.

On the 3rd, FSS Governor Eun-bo Jeong met with financial holding company chairpersons for the first time since his inauguration to discuss the direction of financial supervision and major issues based on these points. Attendees included KB Financial Group Chairman Jong-kyu Yoon, Hana Financial Group Chairman Jung-tae Kim, NongHyup Financial Group Chairman Byung-hwan Son, Woori Financial Group Chairman Tae-seung Son, and BNK Financial Group Chairman Ji-wan Kim.

In his opening remarks, Governor Jeong emphasized, "Although domestic financial holding companies have made significant progress, there remains a large gap compared to global financial firms. We will actively support domestic financial holding companies to develop to an international level."

Governor Jeong stated that the current FSS inspection system, divided into comprehensive and sectoral inspections, will focus on proactive risk identification, preventive measures, flexible responses to changes in the financial environment, and efficient use of inspection resources. He explained, "We aim for a sophisticated and balanced inspection system," adding, "We will expand communication with financial companies during inspections and sanction deliberations, and adjust inspection cycles flexibly for small financial firms such as savings banks within holding companies."

He also presented the supervisory authority's active support direction to strengthen the competitiveness and market value of domestic financial holding companies. He said, "We will review ways to facilitate smoother information sharing within holding groups," and "Through an active interpretation of the Banking Act, we will ensure that there are no restrictions on sharing for business purposes when customer consent is obtained."

Furthermore, he added, "We will improve the method of calculating banks' liquidity coverage ratios to reduce the burden of holding excessive high-liquidity assets and ease capital holding obligations related to carbon emission rights and listed REITs for securities firms."

He also urged efforts for the stable establishment of the Financial Consumer Protection Act and substantial financial consumer protection, stating that supervisory guidance will continue until the end of the year. Governor Jeong said, "We will change the frequency of financial consumer protection evaluations from once a year to once every three years," and "During the remaining period, we plan to strengthen autonomous consumer protection functions through self-inspections."

Regarding concerns about the so-called "perfect storm" due to the ongoing COVID-19 pandemic, rising raw material prices, and U.S. tapering, he said, "Due to shadow banking in real estate and increased interconnectivity within financial markets, not only banks but also the securities sector may trigger systemic risks," urging, "Please carefully examine risk factors and enhance loss absorption capacity."

He also emphasized the smooth implementation of the government's "Household Debt Management Strengthening Plan" announced at the end of October. Governor Jeong said, "Active cooperation from financial holding companies is crucial for the soft landing of household debt," adding, "However, please be mindful not to cause difficulties for actual borrowers during this process."

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