KIF organized a public hearing on the financial holding company enactment. We created this report by combining a paper presented with the comments made in response. The major issues were the following:
- Different regulative systems should be applied to non-bank holding companies and bank holding companies because the former aim to establish financial holding companies with extensive management while the latter have less interest in extensive management.
- The fact that financial holding companies have considerable influence on the stability of the financial system indicates the need for prior approval for financial holding company formation by FSC.
- In principle, the establishment of a grandchild company is prohibited. However, when it is closely related to the business of the subsidiary company, an exception may be granted by the FSC.
- A special procedure in Commercial Law is required for financial holding companies to acquire all of the stocks of a subsidiary company.
- Corporate governance of financial holding companies should be strengthened to enhance transparency and improve the soundness of financial holding companies.
- Ownership restrictions for bank holding companies should not be out of line with the Banking Law. However, exceptions can be applied to financial specialists.
- A comprehensive evaluation for a financial holding company, including subsidiaries, will be made with consideration of adequacy of capital, quality of assets, and management. Based upon the evaluation, prompt corrective action can be applied to the financial holding company.
- It should be clearly stipulated in the law that the financial holding company is the source of the power of the subsidiary company. Therefore, when the subsidiary company is in financial difficulty, the financial holding company should support the subsidiary company.
- It is necessary to establish a firewall to block the risk transition among subsidiary
|Series Title; No||정책조사보고서 / 2000-03|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||한국금융연구원; KDI 국제정책대학원|