FSC chief to meet financial group leaders Tuesday to discuss market stabilization
Financial Services Commission (FSC) Chairman Kim Joo-hyun, third from right, stands next to the chairmen of the five major financial groups in Korea at the Government Complex in central Seoul on July 21. From left, NongHyup Financial Group Deputy President Bae Bu-yeol, Hana Financial Group Chairman Ham Young-joo, Woori Financial Group Chairman Son Tae-seung, Kim, KB Financial Group Chairman Yoon Jong-kyu and Shinhan Financial Group Chairman Cho Yong-byoung. Newsis
Major financial groups vow to provide necessary liquidity to stabilize short-term funding market
By Anna J. Park
Financial Services Commission (FSC) Chairman Kim Joo-hyun is scheduled to meet the leaders of the country's five major financial groups next week, aiming to discuss effective stabilization measures amidst increased uncertainties surrounding the local corporate and commercial paper markets. It will be their first joint meeting together in three months, since their last joint gathering on July 21.
According to the FSC, Friday afternoon, Kim and the chiefs of the five major financial groups are slated to meet on Tuesday morning. The participants will be KB Financial Group Chairman Yoon Jong-kyu, Shinhan Financial Group Chairman Cho Yong-byoung, Woori Financial Group Chairman Son Tae-seung, Hana Financial Group Chairman Ham Young-joo and NongHyup Financial Group Chairman Son Byung-hwan.
“The meeting will be focusing mainly on sharing common understandings of the current financial market conditions,” an FSC official told The Korea Times.
FSC chief Kim is expected to urge the chairmen to proactively join hands in various government-led market stabilization programs and efforts, such as pooling capital for creating additional bonds and securities market stabilization funds to provide necessary liquidity to local capital markets. The FSC chairman is also expected to call for them to strengthen their groups' voluntary efforts to increase capital soundness.
During their meeting with the FSC earlier this week, the five major financial groups said they would become a linchpin for stabilizing the local financial markets, by providing liquidity to the local short-term funding market and decreasing the issuance of bank bonds.
In line with the FSC's move to bring more stability and predictability to the local financial markets, the financial authority met earlier this week with major local institutional investors, including the National Pension Service (NPS), the Government Employees Pension Service (GEPS), the Korea Post and the Teachers' Pension. The top financial regulator urged them to refrain from excessive redemption of bonds or trend-following trading, in order to avoid sudden money outflows from the local short-term funding market.
Meanwhile, aiming to check on the financial industry's implementation of the government-led market stabilization initiatives, the FSC held a meeting on Friday morning with the Financial Supervisory Service (FSS), local financial industry associations, financial firms as well as state-run financial institutions. The participants once again vowed to follow through on various government-led liquidity provision programs.
On Sunday, the financial authority announced that the government would inject more than 50 trillion won ($35.2 billion) liquidity to stabilize the faltering corporate bonds market, which recently saw huge spikes in its interest rates, following a default on 205 billion won worth of asset-backed commercial papers issued earlier this month by the Gangwon Province-led Legoland Korea developer. In order to assuage rising market anxiety, Gangwon Province officially vowed Thursday that it will pay back the entirety of the debt by Dec. 15.