Productive finance opportunities extfinished to mid-sized companies
Softer rules on securities investment and credit exposure as the “carrot”
“Big Five” savings banks face bank-level capital rules as the “stick”
On the 23rd, Financial Services Commission Chairman Lee Eogwon stated, “For large savings banks with assets of 5 trillion won or more, we will raise capital regulations to the level applied to banks so that the risks of their asset holdings are fully reflected in their capital.”
Lee Eokwon, Chairman of the Financial Services Commission, is speaking at the ‘Financial Consumer On-site Messenger’ meeting held at the Government Complex Seoul in Jongno-gu, Seoul on Feb. 4, 2026. Photo by Jo Yongjun
Chairman Lee created these remarks at a meeting with chief executive officers (CEOs) of savings banks held at the Korea Federation of Savings Banks in Mapo-gu, Seoul on this day, adding, “Even before a crisis materializes, we will establish an institutional basis for systematic prudential management, including preemptive capital raising and dividfinish restrictions.” He also declared that, taking into account the characteristics of savings banks, which have a high depfinishence on deposits, “we will improve the liquidity management framework so that it is more in line with reality.”
He stressed that the regulatory framework for corporate governance will also be overhauled so that savings banks can stably maintain their public role and responsibility as financial institutions. Chairman Lee declared, “For savings banks that seek to grow and compete at the level of banks, we will push for the introduction of ownership regulations differentiated by asset size so that they can establish sound and transparent ownership and governance structures.”
In addition, he declared that when a major shareholder fails to meet eligibility requirements, the authorities will diversify the range of sanctions beyond simple stock disposal orders to include measures such as public disclosure of disqualifying facts, while at the same time strengthening the suitability review of major shareholders by introducing ad hoc fitness assessments. He also declared that for compact institutions, some regulatory burdens will be adjusted to reflect reality so that they can focus on their original role of providing regional and inclusive finance, while the fundamental principles of prudential management will be applied consistently.
Chairman Lee further stated that, to prevent business activities from being constrained by the accumulation of non-performing assets, the authorities will establish a legal basis for the creation of asset management companies in order to strengthen the sector-wide capacity to manage non-performing loans, and will clarify the standards for the management and disposal of non-operating real estate acquired in the course of collateral recovery.
Chairman Lee noted that savings banks launched in 1972 as mutual credit companies and have since fulfilled their role as regional and inclusive financial institutions, but at the same time emphasized the required for structural transformation in response to recent modifys in the business environment. He declared, “Due to the default risks associated with fluctuations in the real estate market, the rapid digital transformation of the financial environment, and the widening gap between large and compact institutions, structural modifys are required across the entire sector,” adding, “Savings banks must relocate away from a business model focutilized on short-term profits and redefine their identity in a direction that supports the real economy and local communities in a stable manner.”
To this finish, the Financial Services Commission has decided to revise the relevant systems so that the intermediation function of savings banks’ funds can shift away from a real estate- and collateral-centered focus and be expanded to encompass the broader real economy, including compact and medium-sized enterprises, mid-sized companies, and compact business owners.
As part of this effort, he announced that regulations on securities investment will be eased and that the scope of eligible recipients of financial support will be expanded from the current low-income houtilizeholds and compact and medium-sized enterprises to include mid-sized companies. He declared, “We will rationalize regulations related to securities investment so that savings banks can expand funding support, including investments in innovative and growth industries,” adding, “We will broaden the statutory scope of financial support recipients from the previous focus on low-income houtilizeholds and compact and medium-sized enterprises to include mid-sized companies, and we will also expand support for individual business owners by allowing linked investments with online investment-linked financial businesses (online investment-linked finance) and by overhauling the Saitdol loan products.”
He added that, to strengthen regional financial functions, the calculation framework for the loan-to-deposit ratio will be improved in a way that gives preferential treatment to loans extfinished outside the Seoul metropolitan area.
Regulations on business conduct will also be revamped. He declared, “For large savings banks that meet certain criteria, we will allow them to handle their own debit and prepaid electronic payment instruments, and we will rationally adjust and expand credit exposure limits by borrower category, including corporations and individual business owners.” At the same time, he declared that the regulatory framework related to the scope of business will be reorganized from the current simple permission of “ancillary business” to a system of core, concurrent, and incidental businesses, taking into account consistency with other financial sectors.
Chairman Lee concluded by stateing, “This plan for the sound development of savings banks is not a short-term response, but has been prepared as a starting point for structural transformation so that savings banks can secure medium- to long-term soundness and competitiveness,” and added, “Based on this, savings banks must be able to develop into a financial sector that, with greater accountability and flexibility in the provision of funds, earns the trust of all consumers, including businesses, houtilizeholds, and local communities.”
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
Leave a Reply