Ministry Adds New Rules for Mutual Banks, Credit Raters

The Finance Ministry said Thursday it will strengthen regulations governing mutual savings banks, credit card companies, and the use and protection of credit information.

Under the changes, to take effect July 1, payment card firms with 2 trillion won ($1.5 billion) or more in assets must appoint outside directors and a supervisory committee.

The Financial Supervisory Committee will set guidelines to determine who is responsible for damages when credit cards are stolen or lost. Credit card companies will no longer be allowed to sign up new members on the street.

Under the new amendments, mutual savings banks with more than 300 billion won in assets will be required to appoint more than two outside directors and set up an inspection committee.

Special supervision will be applied to mutual savings that have made big loans to their shareholders in two cases: when a bank's total loans to shareholders over the preceding two years is more than 200 percent of their capital, and when banks have been reprimanded for lending to shareholders three or more times within three years.

The changes will also bar a credit evaluation firm from analyzing the credit profiles of firms that hold stakes larger than 10 percent in the credit evaluator. From 2003 that restriction will be tightened to include firms with a 5 percent or bigger stake.

The changes will also allow foreign credit rating firms to invest in domestic counterparts.

by Song Sang-hoon