Financial Supervisory Service to Establish Model Standards for Bank Governance... Task Force Launched

Deputy Director Lee Junsu Holds 'High-Level' Meeting with Chairpersons of 16 Bank Boards

The Financial Supervisory Service (FSS) announced on the 16th that it has formed a joint task force (TF) to establish best practices regarding governance in the banking sector.

The TF plans to comprehensively review international standards, overseas cases, and domestic operational realities for each governance issue to develop best practices.

From this year through next year, the FSS has selected "bank holding companies and bank governance" as a key supervisory and inspection theme in the banking sector and is pursuing various measures. The main contents include regularizing communication with the board of directors, promoting the establishment and dissemination of best practices related to bank governance, and strengthening continuous monitoring and on-site inspections.

In the first half of the year, the FSS held regular meetings with the boards of directors of nine banks, including KB Financial Group, NH Financial Group, Shinhan Financial Group, NongHyup Bank, K Bank, SC First Bank, Kookmin Bank, Industrial Bank of Korea, and Shinhan Bank.

On the 14th, a meeting was held with the chairpersons of the boards of 16 banks, presided over by Lee Joon-su, Deputy Governor in charge of Banks and Small and Medium Enterprises at the FSS. The discussion covered current issues across the banking sector, such as establishing sound governance, potential risk factors in the banking sector, measures to enhance loss-absorbing capacity, and strengthening internal controls.

Deputy Governor Lee stated, "Governance is more important than anything else for banks to maintain resilience and continue growing amid rapidly changing market conditions. Although Korea has improved compared to the past, many evaluations indicate that it is still insufficient compared to global standards."

He added, "There are criticisms that the board of directors' functions of checking and monitoring management are not operating sufficiently, and opinions that improvements are needed in the fairness and transparency of CEO appointments and management succession procedures. The TF was formed to establish best practices that domestic banks can refer to as exemplary standards for practically improving governance."

Regarding the TF operation plan, Deputy Governor Lee said that specific guidelines will be prepared on support systems for outside directors, CEO appointment and management succession procedures, securing collective coherence of the board of directors, improving the evaluation system for outside directors, and enhancing internal controls. The TF will operate for the next three to four months, with plans to finalize and announce the final version in the second half of the year.

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