For Financial Hub in N.E. Asia
FSC Chairman Yoon promises to make Korea a regional financial center
Yoon Jeung-hyun, chairman of the Financial Supervisory Commission (FSC), said, in his speech at a meeting of the Federation of Korean Industries (FKI) on December 7, that the business community should work on recovering public trust they had lost in recent years. He knows that some businessmen would feel that they have done nothing wrong in losing people's trust. But they should realize that some business firms have made mistakes and they were severe enough to damage the reputation of the entire business community. It is sad to see that the entire business community has had to suffer the consequences from lowered public trust because of a few of its members, but it should be the point where business should switch its growth-oriented pursuit to seek a new management direction turning the crisis into an opportunity.
"I think business should be more transparent in its operations and recover their lost trust,"the FSC chairman said. They should improve their governance structures and show clearly their operation statuses in a transparent manner through honest accounting of their officers, staff and investors. It would help their effort to entice investment and boost effectiveness. It is also important for an enterprise to have the ability to cleanse itself when there is a failure in management. Customers and investors would write those business firms off when they learn that they don't have the ability to correct mistakes.
Chairman Yoon said business should have a long-term outlook for their firms, reminding that businesses in the '0s built the plants and roads in empty land, despite a wave of criticism. But they accomplished something that no one expected in those days. They showed the importance of a long-term outlook in doing business.
Business has to make a profit, which is the most important factor in conducting business.
FSC, too, will execute its supervisory role from the point of trust, outlook and profitability. It will try to boost trust in the financial market. Some of you may think that we would tighten the financial regulations, but that won't happen. We, the financial authorities, would not regulate business activities through direct actions, but guarantee business autonomy to the maximum allowable. Our supervisory policies will be based on the principle that market discipline will be maintained so that various interests of market participants will be rearranged by market discipline.
Accordingly, when trust in the market is increased, investors would enter the market with their minds at ease and business firms would be able to secure funds easily. We, the financial authorities and the government believe that trust in the market can only be secured through its transparency. The FSC chairman said the FSC has been streamlining the corporate governance, internal control, accounting and public notice system on a steady basis. There are lots of talks on the subject, but we will proceed with the big subject of boosting market transparency, while reflecting your opinions as much as possible in the process.
We will also make sure that business would operate with long-term outlook by making the operation of the financial sector based on long-term and stable strategies. We have made up our development strategies to make the financial sector a leading business sector in the country for the realization of a financial hub in Northeast Asia. We have completed the restructuring the investment trust sector to build a framework for the restart of the investment asset management industry. In addition, we have introduced the establishment of private equity fund as a vehicle to secure a large sum of funds and operate them as an investment fund in the country.
The FSC will guarantee the corporate pursuit for profit and furthermore lessen the burden on business that could occur in the financial market. We corrected jargons in accounting, and public notices that could be misunderstood easily. We also removed corporate secrets from the list of items required to be put on public notices. We will always look for things we can do to help business so that they could be able to make their "cakes bigger"all the time, the FSC chairman concluded.
In the meantime, Yoon said the efforts for autonomy in the non-life insurance industry are required more now than ever due to its worsening balance sheets caused by stiffened competition. The remark has been taken as a warning to the industry as it tries to cover losses through an increase in the premium rates. He said the FSC should try to slow down the competition, but at the same time, try to find ways to increase the premium rates in a rational manner. FSC officials said what the chairman meant in his remarks were that the FSC should call on non-life insurance firms to tone down their hot competition discounting premium rates, the cause for losses and reconsider the discount system for accident-less drivers.
Frequent auto accidents and insurance discounts have driven down profits for those insurance firms from the end of last year and most of those firms were estimated to have incurred losses last year. nw

FSC Chairman Yoon Jeung-hyun