KDIC aims to expand scope of deposit insurance

Yoo Jae-hoon, president of the Korea Deposit Insurance Corporation (KDIC), speaks during a press conference held at the Korea Press Center in central Seoul, Wednesday. Courtesy of KDIC

State firm unveils plans to better protect consumers

By Anna J. Park

The Korea Deposit Insurance Corporation (KDIC), a state-led company that insures deposits across the local financial industry, has unveiled its new strategic vision, aiming to expand the scope of deposits that it insures.

“The traditional deposit insurance system, which focuses on responding to situations with ex-post measures, cannot properly address future financial risks,” Yoo Jae-hoon, president of the KDIC, said during a press conference held in central Seoul, Wednesday. “Foremost of all, the scope of financial consumer protection should be expanded, breaking the current protection regime centering on savings deposits.”

He highlighted that the deposit insurance agency should come out of the current system to offer better protection to a larger group of consumers, given that the total amount of deposits made in local financial sectors rose by more than 2.5 times during the past decade. The amount rose to 2,884 trillion won ($2180 billion) last year, from 1,161 trillion won logged in 2010. During the same period, the entire amount of assets under management by local financial securities firms nearly tripled to 2,794 trillion won from 947 trillion won.

The head of the KDIC also vowed to closely cooperate with the government as well as the National Assembly to increase the deposit cap that the agency guarantees for savers.

Currently, the cap is set at 50 million won per person at each financial company. Savings deposits exceeding the cap at one financial company, whether it be banks, securities firms or insurers, cannot be guaranteed under the KDIC. The KDIC chief explained, while the agency can't decide alone on raising the deposit insurance cap, it will provide ample research and materials to the government and the National Assembly for inducing the change in the cap.

“Cases like pension savings should be applied to separate cap standards, considering their unique social security features,” the KDIC chief said.