FSC Imposes Management Improvement Requirement on SangSangInPlus Savings Bank (Comprehensive)

Union Savings Bank Granted Deferral of Prompt Corrective Action

On June 25, the Financial Services Commission (FSC) announced that it had held its 12th regular meeting and decided to impose a management improvement requirement on SangSangInPlus Savings Bank, while deferring prompt corrective action for Union Savings Bank.

SangSangInPlus Savings Bank underwent a management status evaluation by the Financial Supervisory Service (FSS) after its soundness indicators deteriorated during the normalization process of real estate project financing (PF), among other factors. The FSC explained that the decision to impose the management improvement requirement was made after comprehensively considering the FSS evaluation and the management improvement plan submitted by the savings bank.

This management improvement requirement calls for measures such as increasing capital, disposing of non-performing assets, and restricting the holding of risky assets in order to swiftly improve the deteriorated soundness indicators. The measure does not include restructuring actions such as business suspension, so the bank is expected to continue normal operations during the 12-month implementation period.

However, even during the implementation period of the management improvement requirement, if the savings bank's asset soundness and overall management condition are deemed to have sufficiently improved after review, the FSC plans to terminate the requirement through a formal resolution.

Since 2022, the financial authorities have conducted three rounds of management status evaluations as of the end of March, June, and September last year for savings banks whose soundness has deteriorated due to factors such as a sluggish real estate market and a decline in borrowers' repayment abilities. As a follow-up, prompt corrective actions have either been imposed or deferred to facilitate the swift normalization of management.

There are currently no additional management status evaluations scheduled. The authorities are monitoring the implementation of management improvement and normalization plans for the individual savings banks that have already received measures. They also stated that the termination of prompt corrective actions (including deferred cases) is expected for some savings banks.

An FSC official stated, "Unlike in past crises, the savings bank sector now maintains sufficient loss-absorbing and crisis-response capabilities, so the impact of these measures is expected to be extremely limited." The official added, "The government will continue to manage the soundness of savings banks to prevent insolvencies, while also guiding them to strengthen their competitiveness going forward."