Deposit recognition limit raised by 1%
KBBC to provide covered bond guarantees,
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, ‘[Seoul Economy] ‘,
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, ‘Financial authorities have decided to strengthen the incentives given when issuing covered bonds to expand fixed-rate loans.’,
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, ‘On the 27th, the Financial Services Commission announced this at the ‘Covered Bond Payment Guarantee Business Agreement Ceremony for Activating Private Long-Term Mortgage’ held at the Bank Association in Seoul Jung-gu. Attendees at the agreement ceremony included Vice Chairman Kim So-young of the Financial Services Commission, Shinhan Bank President Jung Sang-hyuk, Woori Bank President Cho Byung-kyu, and Hana Bank President Lee Seung-yeol. Covered bonds are liquid bonds issued with housing mortgage loan receivables as collateral.’,
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, ‘The Financial Services Commission has agreed to relax the reserve ratio regulation (less than 100% of loan-to-deposit ratio in Korean won) when banks increase covered bond issuances. Currently, covered bond balances within 1% of Korean won deposits (maturity over 5 years) are considered as deposits. The Financial Services Commission has decided to grant an additional 1% limit for covered bond balances with a maturity of over 10 years. From the bank’s perspective, as the portion considered as deposits increases, it becomes easier to comply with the reserve ratio regulation. The Financial Services Commission stated, “We will consider further expanding the recognition limit if necessary based on the issuance of covered bonds and household debt trends.”‘,
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, ‘The Financial Services Commission also decided to provide guarantees for covered bonds issued by banks through the Korea Housing Finance Corporation. This is to strengthen credit for covered bonds and lower banks’ funding costs. Vice Chairman Kim stated, “Most banks still rely on short-term funding, and recently, new issuances of covered bonds have significantly decreased, failing to gain market response.” He added, “Through the ‘Bank Covered Bond Payment Guarantee’ service launched as a result of the agreement ceremony, commercial banks will be able to raise funds at lower interest rates.”‘,
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