The Financial Supervisory Service will conduct in-depth monitoring of large corporations with a high risk of potential insolvency. Concerns are growing that major domestic exporting corporations could suffer severely and deteriorate financially due to the U.S. government's high tariff policies and China's dumping exports, which is interpreted as a preemptive response.
On the 10th, the FSS noted through its '2025 business plan' that it will refine management to early identify potential risks from corporate debt. The FSS stated it would induce strict management from key bond banks. After confirming the status of major debt-related agreement compliance checks, the FSS will actively encourage improvements if shortcomings are found, linking assessments of the early warning systems of banks and trends in selecting potential insolvent corporations to ongoing credit risk evaluations.
The FSS will also weekly monitor detailed trends of construction firms with high risk levels and strengthen analysis and checks on vulnerable industry corporations through communication with sector experts. The FSS plans to promote orderly restructuring for insolvent corporations.
To ensure stable management of household debt, the FSS will establish a repayment ability-centered review practice of 'borrowing only as much as can be repaid' and focus on qualitative structural improvements centered on 'partitioning and fixed rates.' The FSS is preparing for the smooth implementation of the debt service ratio (DSR) phase three and is advancing the monitoring of household loan trends.
The FSS announced it will fundamentally improve the sales practices and internal control culture within the financial sector. To prevent incomplete sales, it will improve selling practices by ensuring that high-risk financial products like equity-linked securities (ELS) are 'sufficiently explained and contracted' to 'suitable' consumers. The FSS will also establish 'selection and evaluation standards for delegated sales GA (insurance agencies)' to strengthen the control of selling delegation risks and implement an operational risk assessment system for insurance companies.
To strengthen internal controls, the FSS will systematically manage the operational status of the 'accountability structure' introduced this year for major financial holding companies and banks, as well as inspect the performance-based compensation systems of financial companies that could lead to financial accidents. Additionally, the FSS will enhance standards for disciplinary measures and specify leniency and exemption criteria to improve the culture of care within organizations. Promotion of whistleblower activation will also be pursued.
The FSS will strengthen soundness supervision to stabilize the financial markets. The FSS is pushing for the introduction of liquidity and leverage ratio regulations for bank holding companies and will establish an 'inspection process' for key underlying assumptions that significantly affect the evaluation of insurance company liabilities. Moreover, to enhance the soundness management of electronic financial service providers such as electronic payment agency (PG), the FSS will disclose compliance status with operational guidance standards semi-annually.
The FSS will also establish a comprehensive management and supervisory system for real estate finance. It will strengthen management and regulatory improvements by thoroughly checking on related household debt, corporate loans, and individual business loans in high interconnectivity with project financing (PF). The FSS will ensure the quarterly evaluation system for PF business sites is firmly established and guide the implementation of seamless restructuring.