Financial Supervisory Service Holds Securities CEO Meeting
Points Out Concentration in Real Estate and Alternative Asset Investments
Emphasizes Funding Role for Innovative Companies like AI
Reiterates Evaluation of Real Estate PF Feasibility
Requests Establishment of Internal Controls in Securities Industry
Lee Bok-hyun, Governor of the Financial Supervisory Service, stated on the 3rd, "It is necessary to play the role of a 'Core Provider' that supplies quality funds to innovative companies, including AI and big data, moving away from the concentration on real estate and alternative asset investments."
Governor Lee made these remarks while attending the 'Securities Company CEO Meeting' held at the Korea Financial Investment Association in Yeouido on the morning of the same day. He said, "To discover a Korean version of Nvidia, the securities industry's sales practices, which have sought easy sources of profit such as real estate project financing (PF), must change."
This is interpreted as emphasizing the core business of securities firms, which is to provide liquidity to the financial market and assist companies in raising funds. Until now, securities firms have had a high proportion of business in real estate PF or alternative investments, lending development funds to businesses at high interest rates. Recently, as liquidity concerns have increased mainly in the secondary financial sector due to PF insolvency issues, business feasibility evaluations are being conducted to weed out insolvent projects.
Governor Lee reiterated the need for an orderly soft landing of real estate PF. He said, "I request thorough business feasibility evaluations and risk management for real estate PF," adding, "If a project is assessed as a potentially insolvent site, please enhance loss absorption capacity by setting sufficient provisions and proactively manage liquidity risks in preparation for the possibility of expanded market instability."
Governor Lee also said, "Please establish a sound organizational culture based on meticulous internal controls." He noted, "Incidents that undermine the duty of good faith to customers, such as employees sanctioned for illegal activities moving to other companies and engaging in the same work due to complacent industry practices, still occur," and urged, "As the ultimate responsible persons for internal controls, CEOs should take their mission seriously to correct wrong organizational cultures and industry order and make every effort to prevent financial accidents."
Additionally, Governor Lee called for expanding investors' choices through efforts of creativity and innovation to diversify and digitize financial investment products. He also said, "I ask CEOs to take responsible roles to ensure that institutional improvement plans, such as the short-selling electronic system to enhance trust among individual investors, are smoothly established."
Meanwhile, this meeting was arranged to discuss 'Advancement of the Capital Market and Development Plans for the Securities Industry' with CEOs of 16 securities firms. Fourteen domestic securities companies (Mirae Asset Securities, NH Investment & Securities, Korea Investment & Securities, Samsung Securities, KB Securities, Shinhan Investment Corp., Meritz Securities, Hana Securities, Kiwoom Securities, Daishin Securities, Kyobo Securities, Hanwha Investment & Securities, Kakao Pay Securities, Toss Securities) and two foreign securities firms (JP Morgan, UBS) attended.
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