Financial Supervisory Service to increase regulation standard, harm on freedom of financial groups
Kim Min Soo | minsu@ | 2018-04-26 10:46:38
Financial Supervisory Service will closely manage the internal transactions of large-scale financial groups such as Samsung and Hanhwa ahead of the implementation of the financial group integrated supervision system in July. Besides, it will strengthen the regulation level by strengthening management oversight on the capital growth of major financial groups such as Mirae Asset. The Financial Group is worried that the new integration regulations will become more serious and the adverse capitalization of banking companies and the drastic overseas advance will shrink.
Yoo Gwang-Yeol, the managing director of the Financial Supervisory Service, held a meeting with executives of seven financial group integrated supervisors including Samsung, Hanwha, Hyundai, Lotte, DB and Mirae Asset in Seoul, Explained the integrated supervision system. The Financial Supervisory Service has set the date that the standard of the financial supervisory system will be fully implemented in July, but the readiness of the company is insignificant.
“It seems that there is a lack of interest in group supervision on integrated supervision as a result of interviews with practitioners by financial group recently," stated Yoo. "There was a great difference in recognition between the representative company and its affiliates, He said. Yoo said, "Financial groups are urged to make sure that the integrated supervision that we are promoting is a necessary institution for sustainable management of the group, and that the management system should be constructed early."
The financial group integrated supervisory system is designed to prevent financial support through funding between affiliates of financial groups such as large-scale financial firms and Mirae Asset, which are relatively less supervised than financial holding companies, and unfair internal transactions. Financial institutions will set up the best standards and apply them first in July. In the second half of the year, the Financial Supervisory Service will conduct on-site inspections for the implementation of the best practices of the seven major financial groups and the assessment of group risk status.
As a result, the financial authorities can recommend the improvement of management, such as the expansion of capital, for financial groups with insufficient capital adequacy or high reliance on internal transactions. In the financial sector, the merger and supervision of the financial group is expected to be in operation immediately, and for the large financial group, internal transactions among affiliates will be thoroughly blocked. In addition, it is expected that the capital increase through stock exchange (swap) and partnership should be thoroughly verified by the authorities. It has been analyzed that major financial companies such as Samsung Life Insurance, Hanwha Life Insurance, and Hyundai Marine Insurance, which have been bombarded by internal transactions among large corporations, will be the main targets. In addition, Mirae Asset has recently expanded its capital through stock exchanges with Naver and other financial institutions.
Management supervision targets will also be expanded from the largest shareholder to special relationship holders. "The recent amendment to the Financial Stability Act amendments to the Financial Stability Act has expanded the scope of eligibility for large shareholders from the largest shareholder to shareholders, including related parties, including the corporation." Some of the affiliates` "It should be noted that there is a possibility that it will expand to. Accordingly, for major financial group companies such as Samsung and Hyundai, it is necessary to designate the top financial company in the group as a representative company and to expand the organization and personnel sufficient to manage the risk management of the group so that the integrated risk management system can operate.
Also, a counseling organization such as a `Group Risk Management Council` should be established to enable effective integrated risk management, including prevention of conflicts of interest between financial companies belonging to the Financial Group. The organization and role of the Group Risk Management Council and detailed operational standards such as deliberation and reporting procedures should be prepared.
Seo Jeong-ho, director of the Financial Supervisory Service of the Financial Supervisory Service, said, "Some of the supervisory groups made meaningful progress by organizing a Task Force (TF) or sending their employees to a dedicated team to communicate with their affiliates. We held an industry conference to resolve this issue rather than reprimand it," he said.
The banking sector is tightly tied up with the financial authorities` tightening of all-round regulations on financial groups. Concerns have been raised that financial regulations can be double or triple in the financial sector, as the financial sector is already subject to all-round regulations. A senior official of the banking industry said, "I have never heard of Korea`s failure to develop its domestic financial industry due to the lack of regulations from abroad." There is already a regulation on each financial business and the autonomous venture capitalization and drastic overseas advancement will be further shrinking. "
By Kim Min Soo minsu@
[ copyright ⓒ The Digitaltimes ]
Yoo Gwang-Yeol, the managing director of the Financial Supervisory Service, held a meeting with executives of seven financial group integrated supervisors including Samsung, Hanwha, Hyundai, Lotte, DB and Mirae Asset in Seoul, Explained the integrated supervision system. The Financial Supervisory Service has set the date that the standard of the financial supervisory system will be fully implemented in July, but the readiness of the company is insignificant.
“It seems that there is a lack of interest in group supervision on integrated supervision as a result of interviews with practitioners by financial group recently," stated Yoo. "There was a great difference in recognition between the representative company and its affiliates, He said. Yoo said, "Financial groups are urged to make sure that the integrated supervision that we are promoting is a necessary institution for sustainable management of the group, and that the management system should be constructed early."
The financial group integrated supervisory system is designed to prevent financial support through funding between affiliates of financial groups such as large-scale financial firms and Mirae Asset, which are relatively less supervised than financial holding companies, and unfair internal transactions. Financial institutions will set up the best standards and apply them first in July. In the second half of the year, the Financial Supervisory Service will conduct on-site inspections for the implementation of the best practices of the seven major financial groups and the assessment of group risk status.
As a result, the financial authorities can recommend the improvement of management, such as the expansion of capital, for financial groups with insufficient capital adequacy or high reliance on internal transactions. In the financial sector, the merger and supervision of the financial group is expected to be in operation immediately, and for the large financial group, internal transactions among affiliates will be thoroughly blocked. In addition, it is expected that the capital increase through stock exchange (swap) and partnership should be thoroughly verified by the authorities. It has been analyzed that major financial companies such as Samsung Life Insurance, Hanwha Life Insurance, and Hyundai Marine Insurance, which have been bombarded by internal transactions among large corporations, will be the main targets. In addition, Mirae Asset has recently expanded its capital through stock exchanges with Naver and other financial institutions.
Management supervision targets will also be expanded from the largest shareholder to special relationship holders. "The recent amendment to the Financial Stability Act amendments to the Financial Stability Act has expanded the scope of eligibility for large shareholders from the largest shareholder to shareholders, including related parties, including the corporation." Some of the affiliates` "It should be noted that there is a possibility that it will expand to. Accordingly, for major financial group companies such as Samsung and Hyundai, it is necessary to designate the top financial company in the group as a representative company and to expand the organization and personnel sufficient to manage the risk management of the group so that the integrated risk management system can operate.
Also, a counseling organization such as a `Group Risk Management Council` should be established to enable effective integrated risk management, including prevention of conflicts of interest between financial companies belonging to the Financial Group. The organization and role of the Group Risk Management Council and detailed operational standards such as deliberation and reporting procedures should be prepared.
Seo Jeong-ho, director of the Financial Supervisory Service of the Financial Supervisory Service, said, "Some of the supervisory groups made meaningful progress by organizing a Task Force (TF) or sending their employees to a dedicated team to communicate with their affiliates. We held an industry conference to resolve this issue rather than reprimand it," he said.
The banking sector is tightly tied up with the financial authorities` tightening of all-round regulations on financial groups. Concerns have been raised that financial regulations can be double or triple in the financial sector, as the financial sector is already subject to all-round regulations. A senior official of the banking industry said, "I have never heard of Korea`s failure to develop its domestic financial industry due to the lack of regulations from abroad." There is already a regulation on each financial business and the autonomous venture capitalization and drastic overseas advancement will be further shrinking. "
By Kim Min Soo minsu@