Jeong Eun-bo Mentioned the 'Card Crisis': "Risk Management... Proactive Strengthening Needed"

Meeting between the Financial Supervisory Service Governor and CEOs of Specialized Credit Finance Companies

[Asia Economy Reporter Jin-ho Kim] Jung Eun-bo, Governor of the Financial Supervisory Service, emphasized the need for risk management on the 7th, stating that "card and capital companies have structural weaknesses that make them more sensitive during crises compared to other financial sectors."

Governor Jung made these remarks while attending the 'Meeting with CEOs of Specialized Credit Finance Companies' held at the Kensington Hotel in Yeouido, Seoul, on the same day.

Referring to the so-called 'Card Crisis' of 2003, Governor Jung urged active risk management for card and capital companies. Since these companies lack deposit-taking functions, they have a high proportion of low-credit and multiple debtors, making them structurally more vulnerable during crises compared to other financial sectors.

He said, "The card industry has experienced the painful lesson of the Card Crisis, which produced numerous defaulters," and added, "The capital industry also underwent a harsh restructuring process after failing liquidity management during the 1997 foreign exchange crisis." He emphasized, "Learning from past experiences, we must proactively strengthen risk management to prepare for domestic and international uncertainties such as major interest rate hikes and the spread of COVID-19 variants."

Regarding supervision and inspection directions for specialized credit finance companies, he stated, "We will seek harmony and balance between proactive and reactive supervision based on laws and principles."

Governor Jung said, "Considering their structurally vulnerable characteristics, we will strengthen proactive risk supervision," and added, "We will encourage enhanced crisis response capabilities of specialized credit finance companies through stress testing and adjustments to the regulatory capital system." He further noted, "Inspections will be conducted flexibly, taking into account various characteristics such as company size and risk structure."

In particular, he mentioned that they will induce improvements in internal control systems of specialized credit finance companies to ensure that internal audits and corrective capabilities are fully utilized, and for companies with low risk factors, autonomous management will be maximally guaranteed to establish a risk-based inspection practice. From the consumer protection perspective, he pledged to focus on preventing consumer damage throughout the entire process from product development to sales and post-management.

He also stated that they will actively support strengthening the competitiveness of specialized credit finance companies. Governor Jung emphasized, "We will broadly allow ancillary businesses and expedite reviews so that companies can diversify revenue sources using big data and non-face-to-face platforms," and added, "We will actively support everything from expanding the designation of innovative financial services to overseas expansion."

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