Savings Banks with Increased Liquidity... The Central Association Assists in Fund Management

Loan Reduction Greatly Increases Surplus Funds
‘SB Infomarket’ Built into Internal System
Providing Bank and Securities Financial Product Information

The Korea Federation of Savings Banks has decided to provide information on financial products from banks, securities firms, and others to assist savings banks in managing their funds. This initiative aims to support the enhancement of investment profitability for savings banks, whose surplus funds have significantly increased due to a recent reduction in loan operations.

According to industry sources on the 25th, the Korea Federation of Savings Banks has established a separate web platform called ‘SB Info Market’ within the industry document system since the 16th to provide investment information. This includes product information sold by financial companies such as banks, securities firms, and asset management companies, as well as research materials containing market outlooks and stock analyses. The Federation initially selects and introduces principal-protected products such as issued notes and DLBs, as well as products guaranteeing fixed returns, with plans to expand the range of products in the future.

The purpose of building this system is to help improve the investment profitability of savings banks. In addition to interest margin from loans and deposits, savings banks generate profits by directly managing short-term funds. Recently, as loan operations have been significantly reduced to maintain soundness, surplus funds have increased, making the need for investment even greater. Currently, the industry's liquidity ratio stands at 241.4%, far exceeding the legal standard of 100%. Among them, small and medium-sized savings banks inevitably face difficulties in self-management due to a lack of fund management infrastructure and investment information.

Although funds can also be managed through deposits with the Federation, it was considered that self-management by savings banks offers a wider selection of products. Since the Federation must return deposits to member banks, it can only invest in safe assets with a credit rating of 'AAA,' whereas individual savings banks can invest in products rated lower, such as ‘AA’ or ‘A’. This allows them to choose the option with higher returns between deposits and self-management. To support this, the Federation also discloses the yield on deposit fund management.

However, under the Capital Markets Act, the Federation cannot compare or recommend investment products, nor provide investment advice or brokerage at the Federation level. Savings banks use the provided information to conduct their own investment reviews and decision-making, bearing full responsibility for their investments.

A Federation official explained, “Although industry liquidity is high, there is concern about negative interest margins because loans cannot be extended,” adding, “This system was established to help regional and small-to-medium savings banks, which have limited access to information, improve their investment profitability.”

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