FSC Plans to Improve Supervision of Financial Conglomerates in Korea
FSC published a summary of the meeting that its Chair Eun Sung-soo held with the CEOs of financial conglomerates and experts from the private sector. The meeting was intended to discuss ways to improve the supervision of financial conglomerates. The supervision of financial conglomerates is an effort to systematically manage group-wide risks of financial companies, which has become widely in use in advanced countries. FSC plans to take into consideration the opinions from this meeting for the revision of best practice guidelines on the supervision of financial conglomerates, which it expects to finalize by April. The revised guidelines will go into effect in May this year.
As per Mr. Sung-soo, FSC plans to improve the supervisory framework in the following three areas:
- Capital adequacy assessment. The plan is to combine the current distinct "risk concentration" and "risk transfer" categories into a single comprehensive framework for assessing capital adequacy requirements and provide incentives for self-regulatory effort for risk management.
- Disclosure rules. Financial conglomerates shall gather required information from subsidiaries and provide group-wide disclosure of information on their financial statements, investment structures, and risks in an easily understandable format.
- Internal control requirements. Financial conglomerates shall organize and operate an internal control system, through which a group-wide consultative body can be introduced to facilitate discussion by compliance officers on group-wide internal control policy and other relevant issues.
Related Link: Press Release (PDF)
Keywords: Asia Pacific, Korea, Banking, Financial Conglomerates, Disclosures, Capital Adequacy, Internal Control, Operational Risk, FSC
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