FSC chief vows to facilitate soft landing of real estate project financing market

Bomi Yoon

Financial Services Commission (FSC) Chairman Kim Joo-hyun, center, speaks during a press conference at the Government Complex Seoul, Thursday. Yonhap

Financial Services Commission (FSC) Chairman Kim Joo-hyun, center, speaks during a press conference at the Government Complex Seoul, Thursday. Yonhap

Transparency of financial transactions to be expanded for global investors and consumers from 2024

By Anna J. Park

The Financial Services Commission (FSC) will make efforts to facilitate a smooth resolution of the real estate project financing (PF) crisis as one of the key urgent priorities in 2024, the head of the country’s top financial regulator said Sunday.

“First of all, to facilitate a soft landing for real estate project financing (PF), the FSC aims to bolster regulatory measures concerning the stability of real estate-related financial institutions. Simultaneously, efforts will be made to enhance financial companies’ resilience in absorbing losses associated with real estate PF,” FSC Chairman Kim Joo-hyun said in a New Year’s address.

“At the same time, the government will strengthen business feasibility assessments and activate market normalization funds,” Kim added.

Despite an anticipated decline in global interest rates in the new year, the FSC chief stressed that it is crucial to focus on maintaining economic stability, particularly in real estate project financing, household debt and the soundness of the secondary financial sector.

“While managing the pace of household debt growth, the FSC aims to address debt issues through the reinforcement of debt service ratio regulations, the establishment of a foundation for private long-term fixed-rate mortgages, and improving the management of lease and credit loans,” Kim said.

The top financial regulator also vowed to proactively address market uncertainties by flexibly adopting market stability measures as needed, while enhancing capabilities for corporate restructuring and preemptively preparing for a potential crisis response system.

Additionally, financial authorities will craft measures to foster further innovation and globalization in the financial industries. This will be achieved by enhancing corporate governance in the financial sector and accelerating the development of fintech industries.

“To tackle the challenges of climate change, the FSC will increase the supply of venture capital, refine the ESG disclosure system, and devise strategies to address population decline. Additionally, the government will actively support the growth of future industries, establish regulatory frameworks for digital assets and big tech, and prepare for economic and industrial transformations,” Kim said.

Financial Services Commission's (FSC) flag flies between two national flags of Korea in this undated photo. Courtesy of FSC

Financial Services Commission’s (FSC) flag flies between two national flags of Korea in this undated photo. Courtesy of FSC

The FSC chief also applauded concerted efforts by the government and the National Assembly to advance the country’s financial system to be more aligned with those of global financial markets, including the financial sector’s increased internal control accountability, dividend payment system, response to unfair trading, legalized protection of digital asset holders, as well as the establishment of loan exchange platforms.

Starting in January, a refined fine system for market manipulations and unfair trading practices will enhance the transparency of domestic financial transactions. The introduction of legalized calculations for unjust gains in suspicious transactions is another significant development. In the coming year, internal control at financial companies will see more effective management, particularly from the second half of 2024. The revised capital market law will directly entrust company executives with duties to oversee internal control, fostering increased accountability and steering financial sectors towards greater fairness and transparency.

 

 

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