Due to Consecutive Accidents...Significant Increase in the Weight of 'Internal Control' in Bank Management Evaluations

Suhyup Bank's KRW Loan-to-Deposit Ratio Regulation Also Temporarily Eased for 5 Years

In the Financial Supervisory Service's bank management evaluation, the 'internal control' section will be separated as an independent evaluation category, and its evaluation weight will be significantly increased to 15%. This comes amid growing calls to strengthen internal controls in banks following a series of major recent financial accidents.

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 Yoon Dong-ju doso7@

On the 29th, the Financial Services Commission announced that it will conduct a public notice of regulatory changes to the Banking Supervision Regulations by February 7 next year to reform the bank management evaluation and temporarily ease the KRW loan-to-deposit ratio for Suhyup Bank.

First, the FSC will separate internal control as an independent evaluation category in the bank management evaluation and significantly raise its evaluation weight to 15%.

Under the current evaluation system, internal control is assessed as a sub-item of management control, with a weight of only 5.3%.

However, due to recent consecutive major financial accidents and amendments to the Financial Company Governance Act, the authorities have judged that it is necessary to strengthen internal control not only institutionally but also in supervisory aspects by enhancing the evaluation of internal control status.

Accordingly, the authorities will separate internal control as an independent evaluation category ('CAMEL-R' → 'CAMEL-IR') and significantly increase the evaluation weight to strengthen assessments related to financial accident prevention, anti-money laundering, financial consumer protection, and customer information protection.

Additionally, the authorities will temporarily ease the KRW loan-to-deposit ratio regulation for Suhyup Bank for five years. In next year's budget, the supply of fisheries policy funds through interest subsidy methods will increase by about KRW 700 billion compared to this year, and Suhyup Bank will face some difficulties complying with the KRW loan-to-deposit ratio regulation as it needs to issue fisheries financial bonds to secure funds while handling these loans. Loans under the interest subsidy policy fund are included in the calculation of KRW loans under the KRW loan-to-deposit ratio regulation.

Therefore, the FSC will temporarily ease the KRW loan-to-deposit ratio regulation for Suhyup Bank until the end of 2028, considering the bank's special status under the Fisheries Cooperative Act. Accordingly, Suhyup Bank's KRW loan-to-deposit ratio regulation will be adjusted to 105% in 2024, 110% in 2025?2026, 105% in 2027, and 100% in 2028.

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