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Newsletter | February 2014, Issue 1
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BANKING |
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Amendments to the Banking Act Enforcement Decree |
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On October 21, 2013, the Financial Services Commission (“FSC”) proposed amendments to the Banking Act Enforcement Decree (“Amendment”). The public notice and comment period ended on December 2, 2013, and the Amendment will become effective after the evaluation of the Office of Legislation.
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The details of the Amendment are as follows:
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Prohibiting Compulsory Sale of Bank Products Relating to Loan Transactions
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The Amendment prohibits certain acts such as compulsory sale of banking services in relation to loan transactions. |
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The Amendment views certain acts as compulsory sales if the monthly income from a savings/installment savings account sold during one (1) month before/after the drawdown date exceeds 1% of the loan amount, regardless of the borrower’s intent. |
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If insurance or fund products are sold to a small and medium-sized company or a person who has low credit during one (1) month before/after the drawdown date, it is considered a compulsory sale even if the bank’s monthly income from the insurance or fund products is less than 1% of the loan amount. |
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Lifting Restrictions on Overseas Expansion |
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Banks, regardless of their credit ratings, are no longer required to file any prior reports to the FSC with regards to M&A with a bank’s local subsidiary with capital lower than 2% of the bank’s core capital. |
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Expanding the Scope of Additional/Concurrent Business |
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Bank’s silver bar business: Silver bar sales agency business (without prior report) is permitted as additional business and silver savings account trading business (with prior report) is permitted as concurrent business |
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Loan brokerage business: Loan brokerage business (with prior report) is permitted as concurrent business. |
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