Jeong Eun-bo, Financial Supervisory Service Chief, "Plan to Reform Financial Company Inspection System to Be Announced Within This Year" (Comprehensive)

Jung, Financial Supervisory Service Chief, and Financial Holding Company Chairman Hold Meeting for 3 Days

(From left) Chairman Kim Tae-oh (DGB Holdings), Chairman Kim Ki-hong (JB Holdings), Chairman Kim Jung-tae (Hana Holdings), Jung Eun-bo, Governor of the Financial Supervisory Service (FSS), Chairman Yoon Jong-kyu (KB Holdings), Chairman Son Tae-seung (Woori Holdings), Chairman Son Byung-hwan (NH Holdings), Chairman Kim Ji-wan (BNK Holdings).

[Asia Economy Reporter Jin-ho Kim] Jung Eun-bo, Governor of the Financial Supervisory Service (FSS), stated on the 3rd that the results of the task force (TF) review on financial company inspections and sanctions will be announced within this year if possible.

Governor Jung said in a meeting with major financial holding company chairpersons at the Bankers' Hall in Myeong-dong, Seoul, "We are currently operating an internal TF regarding financial company inspections and sanctions," adding, "Discussions are underway with the intention of shifting to proactive and preventive inspections."

Earlier, in his opening remarks at the meeting, Governor Jung said that the FSS inspection system, currently divided into comprehensive and sectoral inspections, will focus on proactive risk identification, prevention, flexible response to changes in the financial environment, and efficient use of inspection resources.

He explained, "We aim for a sophisticated and balanced inspection system," and added, "We will expand communication with financial companies during inspections and sanction deliberations, and flexibly adjust inspection cycles for small financial companies such as savings banks within holding companies."

Regarding the postponement of the comprehensive inspection of Woori Financial Group, originally scheduled for this month, he clarified, "It is not a withdrawal." He said, "The delay in inspections and sanctions is due to circumstances such as COVID-19," and added, "We will make decisions considering institutional improvements related to inspections and sanctions as well as the COVID-19 situation comprehensively."

Governor Jung also mentioned that to enhance the competitiveness of financial holding companies, restrictions on information sharing within holding companies will be eased, and the calculation of banks' Liquidity Coverage Ratio (LCR) will be proactively improved. He said, "We will review ways to facilitate smoother information sharing within holding groups," and "Through active interpretation of the Banking Act, we will ensure that there are no restrictions on sharing for business purposes when customer consent is obtained."

He continued, "We will improve the method of calculating banks' LCR 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 companies."

Furthermore, he urged efforts for the stable establishment of the Financial Consumer Protection Act and substantial protection of financial consumers, stating that supervisory guidance will continue until the end of the year. Governor Jung 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."

He added, "We will discuss various measures to alleviate inconveniences faced by financially vulnerable groups due to the reduction of branch offices."

Regarding concerns about a 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 thoroughly examine risk factors and enhance loss absorption capacity."

He also emphasized the smooth implementation of the government's 'Strengthened Household Debt Management Plan' announced at the end of October. Governor Jung said, "Active cooperation from financial holding companies is crucial for the soft landing of household debt," but added, "Please be careful not to cause difficulties for actual borrowers during this process."

The meeting was attended by Governor Jung, KB Financial Group Chairman Yoon Jong-kyu, Hana Financial Group Chairman Kim Jung-tae, NongHyup Financial Group Chairman Son Byung-hwan, Woori Financial Group Chairman Son Tae-seung, and BNK Financial Group Chairman Kim Ji-wan.

Hana Financial Group Chairman Kim Jung-tae waved off reporters' questions about his possibility of reappointment, saying, "I have no intention." Earlier, Chairman Kim confirmed his fourth term in March. Having served as chairman for 10 years since 2012, his term runs until March next year. When asked if he intended to be reappointed, he replied twice shortly and firmly, "No." When further asked if he would not seek reappointment, he shook his hands from side to side.

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