The Financial Services Commission discussed key tasks such as expanding the targets of financial supply from a focus on small and medium-sized enterprises to mid-sized companies for a shift to productive finance and an upgrade in soundness, and improving the loan-to-deposit ratio system to facilitate the flow of funds in regional economies.
At the "Savings bank sound development plan" roundtable held on the 23rd at the Korea Federation of Savings Banks and chaired by Chairperson Lee Eog-weon, comprehensive measures were discussed with a focus on easing business regulations and strengthening capital management, as the savings bank sector expands the targets of funding support to mid-sized companies. In attendance were the Financial Services Commission (FSC), the Financial Supervisory Service, the Korea Deposit Insurance Corporation (KDIC), the heads of 12 savings banks, and Korea Federation of Savings Banks Chair Oh Hwa-gyeong.
Lee said, "We highly value the industry's efforts to manage soundness during the normalization of real estate project financing," adding, "However, amid crises such as real estate market fluctuations, digital transformation, and polarization within the sector, a structural shift to become a productive financial institution is urgent."
The Financial Services Commission (FSC) will shift savings banks' capital flows from real estate and collateral-centered lending to the real economy. By easing regulations on securities operations, it will widen capacity to support innovative industries and expand the main corporate lending targets from small and medium-sized enterprises to mid-sized companies. To support small merchants, it will also review separating online investment-linked investments and the mid-rate "Saitdol" loan products.
In particular, by improving the loan-to-deposit ratio system, it will give preferential treatment to loans outside the greater Seoul area to spur regional economic activity. Lee said, "Savings banks must establish themselves as hubs for regional and everyday finance."
To strengthen competitiveness, business regulations will be extensively overhauled. Large savings banks with sizable assets will be allowed to handle new businesses such as debit and prepaid electronic payment instruments, and for medium and large institutions with assets of 1 trillion won or more, credit exposure limits for corporations and sole proprietors will be rationalized. The business framework will be reorganized into "principal, concurrent, and incidental businesses," and regulations on broadcast advertising will be eased.
To anchor productive finance, the soundness management framework will be raised to the level of banks. For large institutions with assets of 5 trillion won or more, capital regulations will be gradually upgraded to bank levels, and the FLC (future lending capacity) asset classification will be introduced to strengthen provision accumulation. For small institutions (1 trillion won or less), the external audit cycle will be adjusted to reduce burdens.
Regulations on ownership and governance will also be differentiated by asset size, enabling preemptive capital raising and dividend restrictions at the early stages of a crisis. Monitoring of deposits and liquidity ratios will be improved. To manage nonperforming loans, standards will be established for creating savings bank asset management companies (AMCs) and disposing of non-business real estate.
The Financial Services Commission (FSC) said it will swiftly push legislative and institutional improvements to help savings banks "leap forward as trusted hubs for regional and everyday finance." The industry noted both expectations and concerns, saying, "The key will be balancing greater business freedom with soundness requirements."