“Infrastructure for the expansion of the cap on protected deposited money will be created, and a legal overhaul will be carried out to help financial institutions brace for insolvencies preemptively,” Chairman & President Kim Tae-hyun of Korea Deposit Insurance Corp. (KDIC) said.
Chairman & President Kim made the remarks at a meeting with reporters celebrating KDIC’s 26th anniversary on June 2.
KDIC was negotiating with financial authorities on expanding the cap and scope of protected depositors, he said.
“Currently, deposit insurance funds are operated at only 55 percent of targets, and the ratio of the coverage of financial products stands at less than 20 percent,” said Chairman Kim. He said that the ratio of covered financial products be raised so help stabilize financial products.
The cap on protected depositors has been fixed at 50 million per person for more than 20 years. If the cap of protecting deposited money increases, more money needs to be offered for deposit insurance funds, burdening financial institutions and consumers, he said.
Chairman & President Kim said he was well aware of financial institutions and financial consumers’ standing, but as the system benefits both sides, it needs to be a process of negotiation and burden sharing.
As for the demand by savings bank officials to lower the savings insurance rate, KDIC Chairman Kim said he can’t accept it, saying money to restructure savings banks has been shelled out by other financial circles.
As for how KDIC is operated, KDIC Chairman Kim prioritized the prevention of insolvencies.
As the economic situation was uncertain in a financial stability perspective, he said it was essential to conduct prior monitoring to minimize deposit insurance fund losses.
In specific terms, he proposed the upgrading of a different insurance premium system: subdividing the different insurance premium system into five grades. If the different insurance premium system is subdivided, he said, financial institutions would be alerted and make efforts to stabilize their soundness.
KDIC Chairman Kim also indicated the limitation of KDIC to focus on follow-up steps.
If financial institutions cooperated with KDIC in normalizing management prior to their insolvency, he said it would lessen the shock the market.
KDIC Plans to Dispose of Stake in Woori Financial Group
Korea Deposit Insurance Corp. (KDIC) plans to dispose of its stake in Woori Financial Group. KDIC began to study the market demand for its a 3.6 percent stake in Woori Financial Group.
On Feb. 11, KDIC sold 2.2 percent out of a 5.8 percent stake in Woori Financial Group, in a block deal. Financial sources said further positions in Woori Financial Group would be sold off to Korean and overseas investors, as KDIC did in February.
Chances are high that KDIC would dispose of the whole of the remaining stake.
Late last year, KDIC disposed of a 9.33 percent stake in Woori Financial Group to Eugene PE, giving it the largest shareholder’s standing in Woori Financial Group’s employee shareholder association.
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