Lee Eogwon: "Capital Rules for Savings Banks with Assets Over 5 Trillion Won to Be Raised to Bank Level"

Productive finance opportunities extended to mid-sized companies
Softer rules on securities investment and credit exposure as the "carrot"
"Big Five" savings banks face bank-level capital rules as the "stick"

On the 23rd, Financial Services Commission Chairman Lee Eogwon stated, "For large savings banks with assets of 5 trillion won or more, we will raise capital regulations to the level applied to banks so that the risks associated with their assets are fully reflected in their capital."

Lee Eokwon, Chairman of the Financial Services Commission, is speaking at the 'Financial Consumer On-site Messenger' meeting held at the Government Complex Seoul in Jongno-gu, Seoul on Feb. 4, 2026. Photo by Jo Yongjun

Chairman Lee made these remarks at a meeting with savings bank chief executive officers (CEOs) held at the Korea Federation of Savings Banks in Mapo-gu, Seoul on this day, adding, "Even before a crisis occurs, we will establish an institutional basis for systematic prudential management, including preemptive capital raising and dividend restrictions." He also said that, taking into account the characteristics of savings banks, which are highly dependent on deposits, the liquidity management framework would be improved to better reflect current realities.

He emphasized that rules on corporate governance would also be overhauled so that savings banks can stably maintain their public role and responsibilities as financial institutions. Chairman Lee said, "For savings banks that seek to grow and compete at the level of banks, we will push for the introduction of ownership regulations by asset size so that they establish sound and transparent ownership and governance structures."

In addition, he said that when major shareholders fail to meet eligibility requirements, the authorities will diversify the range of sanctions beyond orders to dispose of shares to include measures such as disclosure of disqualifying facts, while at the same time strengthening the fit-and-proper assessment of major shareholders by introducing ongoing eligibility reviews. He also said that, for small institutions, some regulatory burdens would be adjusted to reality so that they can focus on their original role of providing regional and inclusive finance, while the fundamental principles of prudential management would be consistently maintained.

Chairman Lee further stated that, in order to prevent business activities from being constrained by the accumulation of non-performing assets, the government would establish a legal basis for the creation of asset management companies to strengthen the sector-wide capacity to manage non-performing loans, and would also clarify the standards for managing and disposing of non-business real estate acquired in the process of collateral recovery.

Chairman Lee assessed that savings banks started out as mutual credit banks in 1972 and have since played the role of regional and inclusive financial institutions, but he also stressed the need for structural transformation in response to recent changes in the business environment. He said, "Due to the risk of defaults stemming from fluctuations in the real estate market, the rapid digital transformation of the financial environment, and the widening gap between large and small institutions, the entire sector is in a situation where structural change is required," adding, "Savings banks must move away from a business model focused on short-term profits and redefine their identity in a way that allows them to provide stable support to the real economy and local communities."

To this end, the Financial Services Commission has decided to revise the system so that the funding intermediation function of savings banks can move away from its current focus on real estate and collateral and expand to cover the broader real economy, including small and medium-sized enterprises (SMEs), mid-sized companies, and small business owners.

As part of this effort, he announced that regulations on securities investment would be eased and that the scope of eligible recipients of financial support would be expanded from the current focus on low-income households and SMEs to include mid-sized companies. He said, "We will rationalize regulations related to securities investment so that savings banks can expand funding support, including investment in innovative and growth industries," and added, "We will expand, under the relevant laws, the scope of eligible recipients of financial support from the previous low-income households and SMEs to mid-sized companies, and we will also expand support for individual business owners by allowing linked investments with online investment-linked finance businesses and by overhauling the 'Saitdol' loan products."

He also said that, in order to strengthen the regional financial function, the system for calculating the loan-to-deposit ratio would be improved in a way that gives preferential treatment to loans extended outside the Seoul metropolitan area.

Regulations on business conduct will also be revised. He said, "For large savings banks that meet certain requirements, we will allow them to handle their own debit and prepaid electronic payment instruments, and we will reasonably adjust and expand the credit exposure limits for each type of borrower, including corporations and individual business owners." At the same time, he said that the regulatory framework related to the scope of business would be reorganized from a simple approach of allowing only 'ancillary services' to a structure based on core, concurrent, and incidental services, taking into account consistency with other financial sectors.

Chairman Lee concluded by saying, "This plan for the sound development of savings banks is not a short-term response, but a starting point for structural transformation to ensure that savings banks secure medium- to long-term soundness and competitiveness," and urged, "Based on this, savings banks should develop into a financial sector that, with greater accountability and flexibility in the provision of funds, can establish themselves as trusted institutions for all consumers, including businesses, households, and local communities."