Savings banks are also working on establishing a governance structure. Following banks, savings banks are set to introduce their governance structure next year. Financial authorities and the Korea Savings Bank Association plan to reference the governance structures of banks to develop a standard framework for major savings banks, to assist smaller companies with the introduction of the governance structure.
According to the savings bank industry on the 25th, the Korea Savings Bank Association will collaborate with financial authorities to set up a task force (TF) to create a standard governance structure plan next month. To this end, the association plans to receive applications for TF participation from 79 savings banks in May, with an expectation that 5 to 7 savings banks, including those affiliated with financial holding companies, will participate.
The goal of the TF is to develop a tailored standard governance structure for savings banks by referring to the cases of banks that have previously submitted their governance structures. To achieve this, the TF is expected to be composed primarily of savings banks affiliated with financial holding companies and large companies that can collaborate with commercial banks.
The financial sector is submitting governance structures by field according to the revised 'Act on the Governance of Financial Companies' that took effect last July. Banks and financial holding companies submitted their governance structures to financial authorities in January, while large securities and insurance firms with total assets of over 5 trillion won must submit their governance structures by July.
Savings banks are divided based on asset size, with a deadline for submitting governance structures by July next year for those with assets exceeding 700 billion won and by July 2027 for those with assets below 700 billion won. Typically, governance structures are prepared to suit the characteristics of individual financial companies. However, given that many of the 79 savings banks are smaller institutions, it is the judgment of financial authorities and the Korea Savings Bank Association that presenting a standard framework would make it significantly easier for them to submit individual governance structures.
The savings bank industry has voiced realistic difficulties in preparing governance structures in line with regulations. While there is agreement on the direction of financial authorities' regulations, smaller companies find certain provisions, such as identity sanctions, to be a substantial burden. Concerns have also been raised about the significant costs, such as consulting fees for submitting to law firms and expenses for establishing internal systems for operations, to write the governance structures.
Financial authorities are proactively supporting the establishment of the system in the second financial sector even before its full implementation. The Financial Services Commission decided in January not to hold financial companies responsible under the Governance Act in case of financial accidents occurring during the pilot operation of the governance structure. Currently, it is known that holding company-affiliated savings banks have begun preparing their governance structures. Small companies submitting in 2027 plan to develop a standard framework through this TF and submit it to authorities based on that.