By Yoon Ja-young
Staff Reporter
The financial regulator will resume general examinations of banks from next month.
The Financial Supervisory Service (FSS) announced Tuesday that it would conduct a general examination on Shinhan Bank and Shinhan Financial Group from May 6 for a month.
The FSS evaluates banks' management status and their compliance with the Banking Act and other pertinent laws and regulations during general examination. Banks in healthy conditions are typically subject to the examination every one or two years.
Shinhan was scheduled to go through a general examination in November, but the regulator delayed it to ease burdens on banks suffering from the global financial turmoil. It has conducted no general inspection on banks since June 2008, when it reviewed SC First Bank.
The regulator said it's resuming the general examination as the global financial market turmoil is showing signs of stabilizing.
Other big banks will go through general inspections later this year, according to the FSS.
It plans to focus on financial health, including support of subsidiaries, the management of liquidity, risk control and executing restructuring plans while examining Shinhan Financial Group. As for Shinhan Bank, the regulator will carefully examine the adequacy of credit and assets, internal control and management's ability to cope with the financial crisis.
FSS Governor Kim Jong-chang said earlier last week that banks' competition to increase bulk led to snowballing short-term foreign debt, leading the country to suffer from a crisis scenario every three months since last September, as the market showed concern that the country would be subject to liquidity trouble if foreign lenders withdrew funds from here.
The regulator has been looking into yen loans, which banks massively marketed before the outbreak of the global financial crisis in early April.