Next Year Financial Holding Companies' Overseas Subsidiaries Credit Extension Limits Increased... Financial Services Commission Approval

On the afternoon of the 13th, the Financial Services Commission announced that it had approved the "Partial Amendment to the Financial Holding Company Supervision Regulations" at the 22nd regular meeting, which temporarily expands the credit extension limits for overseas local subsidiaries of financial holding companies.

On the 9th, officials were busy moving in the corridor of the Financial Services Commission at the Government Seoul Office in Jongno-gu, Seoul, where financial authorities decided to promote a plan to include mortgage loans (Judaemae) in the 'debt refinancing' infrastructure scheduled to be launched in May by the end of the year. Financial authorities explained that they aim to reduce the interest burden on mortgage loans by establishing a debt refinancing platform that allows users to compare financial sector loan interest rates at a glance and switch loans easily. Photo by Dongju Yoon doso7@

Under current law, to maintain the soundness of financial groups and prevent risk transfer between subsidiaries, the credit extension limit between subsidiaries of bank holding companies is set at 10% of their own capital, and the total credit extension limit to other subsidiaries is capped at 20%.

In the case of overseas local subsidiaries of financial holding companies, it has been difficult to raise funds locally due to insufficient creditworthiness and lack of collateral during the early stages of overseas expansion, and domestic fundraising has also been challenging due to credit extension limit regulations between subsidiaries.

Accordingly, the FSC has granted an additional 10 percentage points of credit extension limit to overseas subsidiaries of bank holding companies within three years from the date of incorporation, making it easier to raise funds locally. The amended supervision regulations approved on this day are scheduled to take effect on January 1 of next year.

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