© Reuters. An employee walks at an empty park near a financial district amid the coronavirus disease (COVID-19) pandemic in Seoul, South Korea, September 10, 2020. REUTERS/Kim Hong-Ji/File Photo
SEOUL (Reuters) -South Korea’s financial watchdog on Monday announced a crackdown on careless risk management by financial firms as part of a broader push to prevent the liquidity problems that have beset real estate projects from affecting financial markets.
“Authorities will not tolerate practices of passing on risks to consumers and society by privatising short-term profits without thorough risk management,” Lee Bok-hyun, governor of the Financial Supervisory Service, said at a media conference on the agency’s policy agenda for this year, when South Korea will hold general elections.
Lee said financial firms that avoid making proper provisions for losses could even be kicked out of the market.
Ever since mid-sized builder Taeyoung’s debt repayment troubles last December, South Korea’s financial authorities have been pushing financial firms to reduce exposure to real estate projects to prevent any spill-over onto financial markets.
Lee said that no real estate firm currently had the same debt levels as Taeyoung, which boded well for markets.
He said the agency was also investigating short-selling by foreign banks and will announce additional findings by March.
Asked about the concerns of retail investors that their investments in equity-linked securities were making losses, Lee said authorities would not tolerate financial firms that earn “excessively” through “wrongdoing” in the sales of derivative products”.
Source: Investing.com
