Foreign Financial Companies CEO Meeting Held on the 21st
Lee Jae-myung and Six Major Bank Heads Meeting Also "No Comment"
Woori Financial Group and Bank Inspections "Under Review"
Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), remained silent on the indictment of former Woori Financial Group Chairman Sohn Tae-seung on charges of illegal loans amounting to 50 billion won to relatives, stating, "I will speak about it next time." He also refrained from commenting on the meeting the previous day between Lee Jae-myung, leader of the Democratic Party of Korea, and the heads of six major banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup, IBK Industrial Bank) along with Cho Yong-byeong, chairman of the Korea Federation of Banks, where they discussed support for low-income financial services.
Lee Bok-hyun, Governor of the Financial Supervisory Service (second from the left), is speaking at the 'Foreign Financial Companies CEO Meeting' held on the 21st at the Fairmont Ambassador Seoul in Yeouido, Yeongdeungpo-gu, Seoul. Photo by Financial Supervisory Service
Governor Lee made these remarks after a 'Foreign Financial Companies CEO Meeting' held at the Fairmont Ambassador Seoul in Yeouido, Yeongdeungpo-gu, Seoul.
When asked about the prosecution's decision to indict former Chairman Sohn without detention, Lee replied, "I will speak about it on another occasion." When questioned about the meeting between Lee Jae-myung and the six bank heads the previous day, he said, "You are asking about a topic very different from the indictment of former Chairman Sohn," and left the venue.
Kim Hyung-won, Director of the Banking Supervision Department at the FSS, who was present, responded to questions about the timing and details of the upcoming inspections of Woori Financial Group and Woori Bank scheduled for early next month by saying, "We are reviewing documents," before leaving. This matter has attracted significant attention in the financial sector as the outcome of the acquisition of Dongyang Life Insurance and ABL Life Insurance is expected to be determined based on the management evaluation ratings.
The meeting hosted by Governor Lee was attended by CEOs of 10 foreign financial companies, including Deutsche Bank, AIA Life Insurance, and JP Morgan. This was the first foreign financial company CEO meeting chaired by Governor Lee in a year and a half since July 2023.
At the meeting, Governor Lee conveyed to the foreign financial companies the stability of the Korean financial system and the supervisory authorities' current responses. They discussed countermeasures in case uncertainties in the real economy and financial markets increase due to U.S.-centered trade policies and shifts in climate and energy policies. He also stated that the prudential supervisory system would be enhanced to stabilize the financial market.
He said, "We will enhance the prudential supervisory system by reflecting international consistency so that the Korean financial system can perform its fundamental functions stably without being shaken by external shocks."
According to the FSS, Governor Lee's remarks do not imply creating a specific system for foreign financial companies. Rather, it is explained as an overall refinement of the prudential supervisory framework. An FSS official stated, "We plan to disclose specific details through work plans and other means," adding, "Governor Lee's remarks do not mean creating a new prudential supervisory system tailored specifically for foreign financial companies."
Governor Lee also mentioned that efforts to advance the capital market, including revitalizing the capital market, improving the short-selling system, and supporting shareholder value-oriented corporate management, will continue.
At the meeting, the FSS mentioned three cases where suggestions from foreign financial companies were accepted and improvements were made or are underway. These include ▲relaxation of regulations on overseas stock trading ▲calculation of risk rates for third-sector insurance products (disease, injury, and nursing care coverage) such as stroke and cerebral hemorrhage ▲follow-up measures on network separation regulations.
Park Sung-joo, Director of the International Affairs Department at the FSS, said, "The law requiring overseas stock sales to be conducted through domestic securities firms was improved last February by revising the Enforcement Decree of the Capital Market Act to allow exceptions," and added, "The Korea Insurance Development Institute is currently working on system changes related to calculating risk rates for third-sector insurance products, which have high demand from life insurance companies, such as stroke and cerebral hemorrhage."
He continued, "In August, the Financial Services Commission and the FSS prepared a roadmap to improve network separation in the financial sector, allowed financial companies to use generative artificial intelligence (AI) through regulatory sandboxes, and are promoting improvements in network separation for research and development (R&D) areas."
The CEOs attending the meeting anticipated impacts such as ▲increased inflation risk due to the Trump administration's trade policies ▲slowing pace of interest rate cuts by the U.S. Federal Reserve ▲expanded preference for safe assets due to supply chain restructuring.
They expressed little concern about the Korean financial market, citing ▲sufficient foreign exchange reserves ▲limited impact on the country's credit rating ▲experience in smoothly concluding the impeachment of former President Park Geun-hye.
The CEOs also suggested that financial authorities pursue capital market policies consistently, including value-up (corporate value enhancement) policies and the resumption of short selling.
Governor Lee stated, "We will continue to strive to create an environment where global financial companies and investors can find opportunities and operate stably in the Korean financial market," and added, "We plan to maintain close communication with foreign financial companies on major financial issues going forward."
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