Financial authorities extend measures to ease financial regulations in response to Corona 19

Input 2021.03.09 14:36

The measures to ease financial regulations, implemented as a countermeasure against the novel coronavirus infection (Corona 19), will continue to operate with an extended deadline.

The Financial Services Commission announced on the 9th that at a regular meeting on the 8th, it had decided to extend the plan for flexible financial regulation. Earlier, in April of last year, the financial authorities announced a plan to flexibilize financial regulations in response to Corona 19. This is the second time this was extended after last August.

First, the time limit for sunset will be delayed until the end of September when the liquidity coverage ratio (LCR) deregulation, which was scheduled to end at the end of this month, will be released. LCR is the ratio of highly liquid assets to the expected net cash outflow over the next 30 days. The authorities have lowered the consolidated LCR from 100% to 85% and the foreign currency LCR from 80% to 70% so that the banknotes can maintain the function of financing the real sector.

The grace period for the temporary application of banks, savings banks and mutual finance loan-to-deposit ratios will also be extended by six months until the end of December this year. The deposit-to-deposit ratio is the ratio of loans to deposits, and the standard is 100% for banks. This means that in order to make a loan of 1 million won, you must hold a deposit of 1 million won, including deposits. The financial authorities decided to waive sanctions for violations of less than 5 percentage points in the bank’s loan-to-deposit ratio by the end of the year. From the bank’s standpoint, there is room for more loans with the same deposit. For savings banks and mutual finance, it was decided to waive sanctions within 10 percentage points of the deposit-to-deposit ratio (80-110%).

In addition, the deadline for adjusting the weight of loans for individual business owners will be extended for three months from the end of June to the end of September. The weight of individual business owners was lowered to 85% when calculating the loan-to-deposit ratio so that more loans can be made to small business owners and self-employed people.

For savings banks and credit finance companies (female warriors), by the end of December, the plan to exempt sanctions for violations of the liquidity ratio within 10% points was extended for 6 months, and the mandatory loan ratio in the savings bank business area was also temporarily applied for 6 months. It was decided to postpone until the end of December this year. We did not receive any penalties for violations within 5% of the mandatory loan ratio (30-50%).

The easing of the credit limit between subsidiaries in financial holdings will be applied until the end of September with a three-month extension.

It is a measure to increase the credit limit and total amount of subsidiaries to other subsidiaries by 10 percentage points to 20% and 30% of equity capital, respectively. Through this, in the event of urgent demand for funds, there is room for sufficient funds to be secured through credit offerings between subsidiaries.