Lee Chanjin Says "Non-performing Real Estate PF Loans at Securities Firms Still High...On-site Inspections if Resolution Is Delayed"

FSS Governor Meets with Securities Company CEOs
Emphasizes a "Financial Consumer-Centered DNA"
Calls for an Active Role in Supplying Venture Capital

Lee Chanjin, Governor of the Financial Supervisory Service, announced in a meeting with securities company chief executive officers (CEOs) that on-site inspections will be launched for firms whose cleanup of non-performing real estate project financing (PF) loans is delayed or whose business conduct is problematic.

Lee Chanjin, Governor of the Financial Supervisory Service, is announcing the 2026 work plan at the Financial Supervisory Service in Yeouido, Yeongdeungpo-gu, Seoul. Yonhap News

In the "Meeting with Securities Company CEOs" held on the afternoon of the 10th at the main conference hall of the Korea Financial Investment Association in Yeouido, Seoul, Governor Lee stated, "Despite the Financial Supervisory Service’s efforts to encourage reductions, the balance of non-performing PF loans at securities companies remains high."

He noted, "As of the end of September last year, the balance of non-performing real estate PF loans at securities companies stood at around 3.6 trillion won, which is higher than that of savings banks (1.7 trillion won) and specialized credit finance companies (1.8 trillion won)," and requested, "I ask for your cooperation so that non-performing real estate PF loans can be actively reduced."

He also said, "Please pay close attention to ensure that there is no inappropriate handling of work that takes advantage of superior bargaining positions in the process of normalizing real estate PF," adding, "We plan to conduct on-site inspections of securities companies where the cleanup is delayed or where there are problems in business conduct."

The event served as a venue for communication to discuss this year’s key issues and direction of the securities industry and to hear industry proposals, and was attended by Governor Lee, Hwang Sungyeop, Chairman of the Korea Financial Investment Association, and the heads of 23 domestic securities companies.

At the meeting, Governor Lee stressed the need to ensure that a "financial-consumer-centric DNA" is embedded throughout management. He said, "The distrust that the capital market had to endure due to past mis-selling scandals has become extremely deep," and urged, "For high-risk products, please consider their acceptability from the investor’s perspective and verify their rationality at every stage of the product life cycle." He added, "Above all, for investor-friendly thinking to take root in the field, it will be necessary to reflect not only employees’ sales performance but also efforts to protect customer interests and investors in a balanced way in the key performance indicators (KPIs)."

He also called for aggressive provision of venture capital by securities companies. Governor Lee said, "Evaluating a company’s potential, underwriting the associated risks, and allocating funds is a function unique to securities companies," and added, "Now that you have funding tools such as short-term notes and investment management accounts (IMAs), securities companies should become the key conduit that discovers innovative firms and channels capital market funds into the real economy." He went on to say, "As several securities company CEOs have shown strong commitment to supplying venture capital in their New Year’s messages, the Financial Supervisory Service will provide full support."

Alongside this, Governor Lee called for stronger soundness management at securities companies to ensure smooth provision of venture capital, saying, "As the asset size of securities companies grows, their risk management systems must become more sophisticated accordingly. If soundness management fails, investor protection and the vitalization of venture capital will be nothing more than empty words."

He also urged the establishment of an internal control system based on autonomy and responsibility. Governor Lee said, "The fact that some employees and executives at securities companies are still engaging in unfair trading is a clear case of internal control failure," and added, "As the responsibility mapping system will be expanded to small and mid-sized securities companies this year, the Financial Supervisory Service will continue to monitor how securities companies are being operated."