"Saemaeul Geumgo Also Being Monitored"
Emphasis on Internal Control, Governance Improvement, and Communication with Financial Companies
Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), recently stated on the 5th that in response to concerns over the recent real estate project financing (PF) defaults, 300 to 500 project sites are being regarded as important management targets and are being managed on a mid- to long-term basis.
Governor Lee met with reporters after a memorandum of understanding (MOU) signing ceremony held at Woori Bank Jongno 4-ga Financial Center in Jongno-gu, Seoul, aimed at preventing financial fraud against small merchants in traditional markets. He said, "Please consider the 300 to 500 PF project sites as important management targets," adding, "This means we are closely monitoring them with more detailed management to prevent systemic risks." He continued, "While I believe that appropriate price adjustments are inevitable amid ongoing high interest rates and high inflation, if there is excessive concentration or if it causes anxiety, it could lead to side effects similar to the short-term funding market turmoil at the end of last year," and added, "We are continuously managing these on a mid- to long-term basis, and from the perspective that they are manageable, there is no need for major concern."
Regarding concerns about the deterioration of asset soundness in Saemaeul Geumgo PF loans, he said, "We are maintaining close communication among ministries, including the Ministry of the Interior and Safety," and responded, "We will carefully monitor them as well as the financial companies managed by the financial authorities."
On the issue of the Board of Audit and Inspection pointing out excessive severance pay and violations of service regulations during the FSS regular audit, he mentioned, "We humbly accept the Board of Audit and Inspection's remarks and will continue efforts to promptly correct the problems."
He also expressed his intention to strengthen communication with financial companies to improve the financial system. Governor Lee said, "If internal control issues or improvement issues are identified during inspections, we are considering ways to explain that it would be better to move in a more constructive and positive direction." Regarding governance improvement, he emphasized, "If each financial holding company prepares various improvement plans according to their circumstances, it is the authorities' duty to create an institutional foundation to support them," adding, "Under the leadership of the Financial Services Commission Chairman, we are closely reviewing not only domestic operational methods but also overseas systems."
Regarding the commencement of on-site inspections of Woori Bank, which is involved in the ‘Daejang-dong corruption scandal’ allegations, he said, "Since the media has expressed strong concerns about possible distortions related to the essential financial functions of loans or credit provision, the purpose is to check whether there are any problems," and added, "We will consult with Woori Financial Group on what measures should be taken to prevent similar incidents from occurring in the future."
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