Financial regulator to create level playing field for foreign firms

Korea's financial regulator plans to improve operating conditions for foreign financial firms doing business in the country by creating a more "even" regulatory environment, its chief said Friday.

"We are taking steps to move toward a more even regulatory environment without making any distinction between domestic and foreign, especially in light of Korea's free trade agreements with the European Union and the United States," Financial Supervisory Service (FSS) Gov. Kwon Hyouk-se said during "FSS Speaks 2012," its annual conference with overseas financial firms.

Kwon's remarks come as Seoul's free trade pact with the U.S. is set to go into effect on March 15. Despite fierce opposition, South Korea's parliament in November approved the free trade pact, which was approved by the U.S. Congress in October.

As part of this effort, the FSS will minimize informal and unofficial supervision guidance to improve the transparency of its activities.

Kwon, however, said the regulator will tighten oversight of larger investment banks, with a focus on governance and internal control, while scaling back such a process on smaller players.

The regulator also urged foreign financial firms to heighten their social roles by "seeking ways to contribute to the sense of community."

Kwon's remarks come amid strong public backlash that foreign banks tend to zero in on high-return household lending and refrain from corporate loans in a bid to maximize profit and shun risks.

Meanwhile, the top regulator called for financial firms, both local and foreign, to curb excessive dividend payouts amid lingering market uncertainties.

"More lenders will need to refrain from generous dividend payouts and set aside more of their earnings for future loan losses," Kwon said, adding that more lenders will likely see higher default on their loan assets going forward. (Yonhap)