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(Photo = Financial Services Commission) |
[Alpha Biz= Reporter Paul Lee] Financial authorities have announced plans to enhance internal controls within financial conglomerates such as Samsung, Hyundai Motor, and Hanwha to prevent the transfer of insolvency between affiliated companies.
On the 2nd, the Financial Services Commission and the Financial Supervisory Service announced that they would propose amendments to the regulations governing the supervision of financial conglomerates. Financial conglomerates refer to groups that own two or more financial companies engaged in deposits, loans, insurance, securities, etc., with total assets exceeding 50 trillion won and at least one company licensed or registered with the Financial Services Commission. Currently, seven groups, including Samsung, Hyundai Motor, Hanwha, Mirae Asset, Kyobo, DB, and Daou Kiwoom, have been designated.
Firstly, the dedicated internal control departments will conduct prior reviews focusing on executive concurrent positions between non-financial and financial companies within the subsidiary group. Concurrent positions with overseas financial subsidiaries will also be subject to suitability reviews by dedicated departments after the fact. Internal controls for intra-group transactions and joint business activities, such as product development, among affiliated companies will be strengthened. In principle, joint transactions between affiliates of a certain size will be subject to prior review by the group's dedicated internal control departments. Transactions with overseas affiliates will also require prior review if domestic affiliates are involved.
Affiliated companies closely related to the financial industry will also be subject to the group's internal control standards. In principle, internal control standards will apply to companies actually engaged in the financial industry, while closely related affiliates will be subject to these standards if they have appointed compliance officers under the governance structure law or have five or more employees. Flexible application is planned for overseas financial subsidiaries.
Financial authorities have also decided to change the method of calculating the risk-weighted assets for determining the capital adequacy ratio of financial conglomerates. The seven financial conglomerates will establish permanent consultative bodies to enhance group-level internal control capabilities.
AlphaBIZ Paul Lee(hoondork1977@alphabiz.co.kr)
