By Park Hyong-ki
Staff Reporter
New Financial Supervisory Commission (FSC) Chairman Kim Yong-duk said he will tackle the tasks of bringing the nation's regulatory system up to international standards, and further developing financial firms during his three-year term that started Monday.
``The regulatory body must innovate and make reforms along with the changes in the financial environment,'' said Kim at a press conference in Seoul.
He added that he will lead the organization to better manage the market based on rightful statistics and principles as they are the key infrastructure for the development of sound policies.
Kim, who replaced Yoon Jeung-hyun, had served as the presidential secretary for economic affairs since November 2006 after he stepped down as vice minister of construction and transportation.
He noted that the regulatory body will boost cooperation with related organizations, including the Bank of Korea and the Ministry of Finance and Economy in tackling issues such as excess liquidity and steep gains in loans to small- and medium-sized enterprises (SMEs).
``We are working with the Bank of Korea to better manage and monitor liquidity problems,'' said Kim.
He said he doesn't see any immediate need to draw up additional measures to absorb liquidity on the market. The FSC has directed banks to refrain from extending too many loans to the private sector.
The financial regulator will cooperate with the Fair Trade Commission by signing a memorandum of understanding to promote fair competition and safeguard investors' interests, he said.
Regarding issues concerning the separation of financial and industrial capital and the conflict between credit card companies and merchants over commissions, Kim said that the regulatory body is closely assessing the matter, and will provide appropriate measures soon.
He said the financial regulator will invite experts such as Deputy Chief Executive William Ryback of the Hong Kong Monetary Authority and seek their help to make the nation a financial hub in East Asia.
Kim said he will encourage and promote mergers and acquisitions as well as globalization of financial firms to boost their competitiveness.
``We need to manage the financial market based on laws and market principles,'' Kim said at his first meeting with senior officials. ``Financial supervision should be more open and transparent.''
Although financial firms' balance sheets have improved through restructuring since the financial crisis, he said their operations still show ``herd behavior'' in which banks heavily count on the loans and deposits business, while securities companies rely on brokerage fees for growth.
The financial industry accounted for 7.5 percent of the gross domestic product last year with added value of 71 percent. But data shows that domestic financial firms lag behind their foreign peers in profitability and competitiveness.
Korean banks' total assets are only about one-tenth that of global banks in developed countries, while domestic securities firms' assets reach a mere one-eightieth of that of global investment banks such as Goldman Sachs and Merrill Lynch, according to the FSC.
By benchmarking London's 1986 Big Bang that led the United Kingdom to become the world's financial hub, Kim said he will lead the regulatory body to be fully prepared for the implementation of the Capital Market Consolidation Act in 2009 by deregulating and promoting market transparency.