3

Ⅰ. The current status of major tasks

4

Privatization of KDB

Supervision behavior improvement (Implicit

regulation)

Easing of bank ownership

Improving of non-banking holding company system

‘New Start 2008’(Plans to help low-income people )

Online One Stop system set up

Plans are currently under implementation according to

schedule after the announcement

Commence services on July 1st

Prepared improvement measures and some measures are now being implemented.

Have a final report at the next meeting

•Financial regulatory reform(A thorough study on

all regulations)

Complete the study and make a financial announcement in

July

5

6

(Principle one)Heightening of competitiveness through market competitionEasier entry

and liquidation of a company

Create new industry and new market

(Principle two)Striking balance between financial innovation and market stability

(Principle three)Aligning financial regulations with global standardsBalancing

between financial innovation and market stability with adequate regulation

Strengthening of supervision capacity

Principle-based regulation

Negative regulation

7

Ⅲ. Financial regulatory reform achievements

8

`Private sector-led examination of

regulations whether certain regulations need

to stay in effect (421 major regulations)

Lessening or abolishing 122 regulations among 421 regulations(29.0%)

3.26~5.7

4.22~7

Present

Status reports on the study of all financial

regulations and deregulation

Deregulation by sector

122

Total

41

13

15

42

11Entry/ownership

Corporate governanceBusiness

Scope

Products/sales

Asset

Management

Study on all regulations by the FSC(About 1,300 cases) National competitiveness strengthening committee (477 cases)

9

10

15,000Compani

es

PresentPresent

Points at issue

Points at issueApplication since

1998(The number of companies on the list more than doubled)

Applicable only to listed

companies in the U.S. and Japan

List of companies

for external

audit(Listed/unlisted

companies with more than $7 billion of assets)

Mandatory Internal

accounting control system(Listed/unlisted

companies with assets more than $7 billion)

ImprovementsImprovements

18,074 개

3,600Compani

es 7 bil won

10 bil won 3,600Companie

sAround a $50

billion cut

18,074 개

7 bil won

10 bil won

15,000Companies

Around a $150 billion cut

11

자산운용사의 자산운용사의 계열회사 계열회사 주식취득주식취득

동일 대기업집단동일 대기업집단소속 금융회사의소속 금융회사의PEF PEF 출자한도출자한도

자산운용사의 자산운용사의 계열회사 계열회사 주식취득주식취득

동일 대기업집단동일 대기업집단소속 금융회사의소속 금융회사의PEF PEF 출자한도출자한도

Consolidated financial

statementsand combined

financial statements

Uniform

requirements for financial

soundness of financial

companies’ large shareholders

12

Scope of asset management companies for standing audit

: More than 1 trillion won of working assets 3 trillion won

Improvements and expected resultsImprovements and expected results

InclusionInclusion

9 9 CompaniesCompanies

13 Companies13 Companies

ExclusioExclusionn

22 22 CompaniesCompanies

Around a 300 million won cut for each company (About 6% level of operating profit at the end of

2007 for those 9 companies )

Diverse investor protection measures are in place even though standing audit system is abolished.

13

Enhanced customer convenience

Customer protection and market stability

Allow the issuance of card in partnership between securities companies and credit card companies

Require customer’s assent for the use of personal credit information

Ban on the transfer of customer information obtained by foreign bank branches in the nation

Increase the number of ways to raise difficulties regarding the usage of cards: In writing By telephone, internet

Ban on the immediate issuance and sale of credit card on the street

Shift to negative system in terms of the scope of card payment

Increased interest of financial

customers and

enhanced market stability

****** 증권 증권 CMACMA

*This was suggested to be deregulated but was decided to stay in effect.

14

Combined service center for

civil affairs regarding financial

services※ FSC + FSS

Combined service center for

civil affairs regarding financial

services※ FSC + FSS

e – Financial services system ※ Licensing, authorization, registration,

authoritative interpretation, civil

petitions regarding financial services,

information disclosure

e – Financial services system ※ Licensing, authorization, registration,

authoritative interpretation, civil

petitions regarding financial services,

information disclosure

Online

Services exclusively for licensing,

authorization, authoritative interpretation

Services exclusively for licensing,

authorization, authoritative interpretation

RM(Helper for licensing and authorization process)

One-stop service center

Offline

3. Online·One-stop service system

15

3. 온라인 원스톱 민원처리시스템 구축

16

17

18

19

20

21

22

23

24

25

26

27

28

29

Operate Ombusman system

Administrative guidance and

sunset clause

Prepare legal basis for

prohibiting implicit

regulations

Operate Ombusman system

Administrative guidance and

sunset clause

Prepare legal basis for

prohibiting implicit

regulations

Prepare measures to ease implicit regulations

Put OnlineOne Stop

Service into service

Activate No-action letter

system

Put OnlineOne Stop

Service into service

Activate No-action letter

system

Upgrade transparency

Sanctions against violation of

regulations

Improve system

Reinforce risk management

and management consulting

Sanctions against violation of

regulations

Improve system

Reinforce risk management

and management consulting

Improve sanction-oriented examination practice

Strengthen self-regulation

system in each industry

Grant incentives to

excellent employees

Strengthen self-regulation

system in each industry

Grant incentives to

excellent employees

Delegate authority and provide incentives

30

Satisfaction levelSatisfaction level Enhancing the competitiveness of the Korean financial industryEnhancing the competitiveness of the Korean financial industry

Very satisfact

ory34%

Satisfactory,

37%

Average17%

Unsatisfactory11%

Market participants have high expectations on the government’s

regulatory reform

40 위

IMD 금융경쟁력 순위IMD 금융경쟁력 순위

With successful regulatory reform, the government aims to rank within the top 20 during the presidential term and within the

top 10 within 10 years

38 위 37 위31 위

40 위

20 위 10 위

40 위 38 위 37 위31 위

40 위

20 위

10 위

IMD 금융경쟁력 순위IMD 금융경쟁력 순위

*FSS(‘08.6)

31

Ⅳ. Future tasks to create new market and new industry

32

Entry policies for each financial industries in the futureEntry policies for each financial industries in the future

은행Bank

보험Insuran

ce

Securities and asset

management

Easing of bank ownership

(Align regulations with global

standaards)

Diversify authorization requirements

(prepare groundwork for

creation of internet banking)Expand

business scope

(Use add-on style)

Allow new entrants

without limit

Loosen regulations

on entry

Allow new entrants without

limit(Especially monoline insurance company)

33

Effects

CustomerCustomer

…

34

Credit card

Installment financeCompanies

with new technoligies

Blue-chip and sound loan company

PresentPresent ReformReform 기대효과Expected results

기대효과Expected results

Specialized credit financial business

act

The loan company

act

Customer financingCustomer financing

•Ease sales regulation such as expanding the ratio of loan business

•Strengthen soundness supervision and customer protection

•Prevent damages from private loan

•Fortify supervision of financial supervisory authorities

Credit card

Increase the supply of financial services to ordinary citizens

Raise customers’ accessibility to high quality financial services

Prevent damages from private loan

- High interest rate

- Illegal collection

- Lack of supervisionFinalize the plan to introduce customer financing within this yearFinalize the plan to introduce customer financing within this year

Lease

35

Shopless internet bank: banks providing most of financial services

through electronic media of a few sales center or exclusively through online

Shopless internet bank: banks providing most of financial services

through electronic media of a few sales center or exclusively through online

Allow as much financial services as possible

to be able to choose diverse sales strategies

ShoplessInternet banks

Emergence of diverse financial products through shopless internet Banks Enhanced customers’ interest and heightened competition in the banking sector

Emergence of diverse financial products through shopless internet Banks Enhanced customers’ interest and heightened competition in the banking sector

Allow the amount of capital lower than the current banks capital of 50 billion won Provide customer services such as allowing

customers to raise difficulties not only through writing but also by telephone and email.

36

Bond insurer: a financial guarantor and a provider of specialized financial servicesBond insurer: a financial guarantor and a provider of specialized financial services

Revitalize the CB market through better corporate bond credit rating-> reduction in capital funding(corporate), diversification of investment products(investor)

Revitalize the CB market through better corporate bond credit rating-> reduction in capital funding(corporate), diversification of investment products(investor)

Bond insurer

Credit rating agency

Corporate bond

Bond insurance structure

Credit assessment

Gu

ara

nte

e

InvestorInvestment

Introduction plan(Ex)

Entry requirements: high credit rating(ex: international credit rating above AA

Scope of business: CB insurance, CDS(risk distribution)

Scope of guarantee: blue-chip corporate bonds

37

Merchant Cash Advance:

Extend loan based on the amount of credit card sales of small-scale enterprises

Merchant Cash Advance:

Extend loan based on the amount of credit card sales of small-scale enterprises

Insure certain sales activity of small scale business and secure the repayment of loanInsure certain sales activity of small scale business and secure the repayment of loan

Credit card

company

Bank account for credit card

charges

Small scale

businesses

Cre

dit c

ard

sale

s

Bank

Repayment of loan with part of monthly credit card payment

Loan based on the amount of credit card sales

38

• Graduate school of finance

• System of fostering financial experts

with field experiences(ex: NYIF, a

private provider of financial training

and education)

Improved organizations to nurture

financial professional

• Formation of communities(corporate,

academia and government) to grow

financial experts

• Development of core standard job for

the financial industry

• Introduction of ‘Government certificate

system’ for quality education course

Improved organizations to foster

financial experts

Taking care of lack of financial professions(Need about 1,400 experts

for the next five years) Maximize the job creation effect

through development of the financial industry

Taking care of lack of financial professions(Need about 1,400 experts

for the next five years) Maximize the job creation effect

through development of the financial industry

39

New industr

y

New market

Financial

experts

Next growth engine

Job creatio

n

40

V. Future milestone

41

Privatization of KDB

Supervision behavior improvement

Easing of bank ownershipImprovement of non-

banking holding company system

‘New Start 2008’(Plans to help low-income people)

Online Onestop Service set up

Currently being implemented after the announcement

Commence services in July after completing the system

set upImprovement measures for supervision behavior and some are currently under

implementation

Have a final report at the next meeting

Financial regulatory reform(A thorough study

on all regulations)

Complete the study of all regulations and make a final

announcement in July

Improvement of regulations on sales

activity and behavior of financial companiesMeasures to strengthen supervision capacity

Prepare additional improvement measures and

report them at the nest meeting