FSC to ease rules for foreign lenders

Financial Services Commission chairman Yim Jong-yong attends a meeting with heads of foreign banks operating here in Sogong-dong, central Seoul, on Friday. (Yonhap)

Korea’s top financial regulator promised on Friday to ease regulations for foreign lenders seeking to expand their banking operations.

In a meeting with the heads of foreign banks operating here, Financial Services Commission chairman Yim Jong-yong said he will actively engage in improving the regulatory system for foreign lenders as long as they do not cause a “conflict of interest.”

He said the FSC will push to let foreign banks open branches without the existing prerequisite of opening a local office. The regulator currently requires the foreign banks to set up a local entity before launching branch operations. Foreign lenders have complained that the regulation does not comply with the global standards.

“Raising the conformity of financial regulations has been an essential part to encouraging global financial businesses here,” Yim said.

This the FSC chairman’s first appearance a regular branch head-level meeting of foreign banks since his inauguration in March. A total of 59 bank leaders, including 39 branch heads and 20 headquarters chiefs, attended the meeting to voice their interests and concerns in doing business in Korea.

In addition, Yim said the FSC would more flexibly apply international credit ratings. For reliability issues, the regulator has approved a foreign bank to operate here only after being confirmed that the lender satisfies any one of the minimum requirements of a third-party credit rating, size of assets or the number of international branches.

Yim said that provided there is no urgent call to protect the local customers, the financial watchdog will give approval on a broader range of conditions, such as listings on stock exchanges outside Korea.

“Just as Korean banks are encouraged to open businesses in the global markets, the foreign banks operating here are duly appreciated for their contribution to the development of Korean financial markets and to the expansion of consumers’ convenience,” Yim said.

By Chung Joo-won (joowonc@heraldcorp.com)