Revisions of ‘Supervisory Regulations and Customer Protection System of the Mutual Savings Banks’


The topic I would like to introduce you guys is ‘Supervisory Regulations and Customer Protection System of the Mutual Savings Bank’. On May 7th, 2013, the FSC (Financial Services Commission) officially announced revisions of the Supervisory Regulations of Mutual Savings Bank. The reason why the FSC put in a lot of effort on this revision was to improve soundness of savings banks’ management. So let’s find out what major changes were made in the revision!


The first major change is that the subject of report rewards is greatly enlarged. Let’s take a look at a deeper look into it. From now on, reporters (accusers) can report on subjects of “investing in marketable securities exceeding equity capital”, “having a possession on real-estate for non-business use”, “liability for guarantee or securities provided”, “loaning capital having a purpose of buying a share of particular savings bank”, “loaning having a goal of a speculative enterprise”, “loaning under disguised ownership”, and lastly, “providing property interests to major shareholders”. The seven additional items to the existing five phrases of existing provisions greatly extended possibility of spontaneous participation of accusers.

The next major change made is the extensive reorganization of screening criterion of major shareholders and management evaluation. First, let’s take a look at the screening criterion of management evaluation. Existing law states that the possibility of potential capital increase is used to evaluate capital optimality, but the revision has added a phrase “optimality of capital composition.” Also in case of evaluating non-metrical asset soundness, existing law has used techniques of checking capacity of management and differentiation of credit being discussed but the revision has substituted it with a new provision, which says evaluation is to be done through construction and operation trade off of a credit screening system.

Last major change made is enhanced system of evaluating criterion of major shareholders. First, the revision has erased the phrase of limiting corrective manager to the FSC. For example, current law states the FSC as the only disciplinary authority that can make sanctions on major shareholders who received institutional caution. But in the revision the FSC is exempted which means that there are a lot more ways to restrict carelessness and injustices made by major shareholders of savings banks.

Now, you have seen what major changes were made to the revision. As you can see the financial authorities seemed to have put in a lot of effort to improve supervisory system over savings banks in order to protect customers. Of course, there can be unexpected problems, both small and big, but I hope all the readers and the citizens to trust and support the financial authorities.

By Hyok Hee Kwon (

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