KDIC chief vows to strengthen crisis response monitoring

Korea Deposit Insurance Corporation (KDIC) Chairman and President Yoo Jae-hoon speaks during a press conference at the President Hotel in central Seoul, Friday. Korea Times photo by Anna J. Park

With the global economy's projected growth for next year slowing amid increased uncertainties, the Korea Deposit Insurance Corporation (KDIC) aims to bolster its crisis response monitoring system for the domestic financial sector, the agency's head said Friday.

During a press conference held in central Seoul earlier in the day, KDIC Chairman and President Yoo Jae-hoon vowed to overhaul the state-run agency's structural framework and operating system over the next few years to digitalize it and make it more sophisticated and effective, in order to better play its role as the backer of the local financial industry.

"The KDIC, which has been focusing on its central role of resolving insolvency and managing public funds since its foundation in 2003, should now move forward in the direction of sensing any triggers of financial instability and thereby responding swiftly and preventing future financial crises by taking more accountability and initiatives," Yoo said during the press conference, highlighting the agency's new three-year vision towards the goal.

The KDIC chief said that the agency jointly conducted a stress test with the Bank of Korea (BOK) earlier this year in preparation for appropriate responses to any signs of financial crises. He accentuated that such coordination systems with financial authorities will be strengthened in next year, as it is also working with the Financial Supervisory Service (FSS) to develop a monitoring system to swiftly identify money move trends on local deposit accounts at banks.

"In addition, the KDIC will also focus on drawing up a speedier financial resolution system, given that bank runs can now occur in an instant, as seen in the collapse of Silicon Valley Bank, with the banking sector's deepened digitalization. Accordingly, a resolution process should not take a long time, as it used to in the past, and we're now examining what we can do under the current Korean legal framework and reality," Yoo said.

Regarding the failed sale attempts of MG Non-Life Insurance throughout this year, the KDIC chief said he remains optimistic that the agency will have a chance to sell the company, as there are improvements in the non-life insurer's business performances. As to the withdrawn IPO attempt of Seoul Guarantee Insurance (SGI) earlier this year, the largest shareholder of the SGI said it is still recovering public funds amounting to 200 billion won ($153 million) every year as dividend payments. Yoo said the KDIC will continue pursuing the recovery of public funds in various ways.