The new chief financial regulator said Tuesday he will revamp the country’s bourse system so that different markets can play stronger individual roles, just one of a number of reforms he outlined in his first press conference since taking office.
Yim Jong-yong, inaugurated Monday as the head of the Financial Services Commission, said he does not plan to relax property market regulations despite the high-paced household loan hikes, asking for more time to monitor the effects of prior deregulations.
The new chief said he will discuss ways to reorganize the country’s three-tier bourse system — benchmark KOSPI, KOSDAQ and KONEX — stressing that boosting equity markets is one of the most urgent issues in the government-led economic revitalizing program.
KOSPI serves as the highest market that guarantees stable profits while the secondary KOSDAQ is mostly mid-sized tech-savvy ventures. KONEX was opened in June 2013 for start-ups so that they can raise capital more easily.
“I want to draw clear lines among these three platforms and strengthen their own functions,” Yim said, without going into further detail.
The FSC chairman said he has no immediate plans to tighten real estate market rules, demanded by some to rein in the rapidly rising household debt.
The government in August had eased the loan-to-value ratio and the debt-to-income ratio, both aimed at widening access to home mortgages. Household loans have since increased, reaching 1,029.3 trillion won at the end of December, a 27.6 trillion won spike from the previous quarter. The figure passed the 1,000 trillion won mark for the first time in the third quarter last year.
“Only seven months have passed since the LTV-DTI deregulation. We need to take time to wait for more visible effects,” said Lim. “It helped boost the housing market, and household debtors shoulder lighter interest burdens. It has had positive effects so far,” Yim said.
“To solve the (household debt) problem, we need to adopt more microeconomic and partial solutions,” he said.
Yim, the former chairman of Nonghyup Financial Group, has been championing reforms of South Korea’s financial industry that he riled as falling behind the changes of the global market.
“Despite its quantitative growth, we cannot feel the results or the sector’s global competitiveness,” Yim told reporters.
The country’s total financial assets stood at 3,575 trillion won ($3.2 trillion) as of September last year, compared with 944 trillion won at the end of 1997 at the time of the Asian financial crisis. Top banking groups KB Financial Group Inc. and Shinhan Financial Group Co. placed 68th and 69th, respectively, in international bank rankings.
South Korean financial firms, however, have sat on their laurels while the global market has vastly transformed in the aftermath of the 2008 financial crisis, Yim said. They neglected their duty to supply money to the financially needy and fund venture capital, and rather sought growth from interest income from household loans and commission profits, he said.
This, he said, undermined the dynamics and innovative spirit of the financial sector and hindered its growth.
The new chief said he will still respect the autonomy of the market, helping financial players make their own decisions on price setting and product launching.
“Along with the rational decision-making process at financial institutions, I will tighten regulations to protect financial consumers at the same time,” said Yim, adding the financial watchdog will reorganize the supervisory and regulatory system.
Yim also vowed to sell the state-run Woori Bank to private investors as soon as possible and brainstorm possible ways to do so with related government agencies and the financial circle.
The Seoul government had put the bank up for sale four times to recoup some 13 trillion won in bailout money invested in the aftermath of the 1997 crisis, but all attempts had collapsed due mainly to a lack of bidders, with the latest auction held in November.
“I had engaged in two previous Woori Bank sale attempts as a vice finance minister,” said Yim. “Based on my experience, I want to first take the issue public and collect various ideas on sales plans.”
Yim said he will pave wider paths to give full support to the financial technology, or fintech, industry, a new type of business based on using software to provide financial services.
“I will come up with new guidelines to let Internet banks do business here by June this year,” said Yim, hinting that he will likely ease restrictions that ban industrial capital from investing in financial entities. (Yonhap)
