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REGULATION by MikeJenny

VIEWS: 16 PAGES: 34

									                                 REGULATION
                                      ON
        SUPERVISION OF MUTUAL SAVINGS BANK BUSINESS
                   Regulation on Supervision of Mutual Savings Bank Business



                                 CONTENTS


I.       General Provisions
§1.      Purpose
§2.      General Guidelines
§3.      Scope of Application
§4.      Definitions


II.      Authorization and Notification
§4-2. Authorization Standards for Branch Establishments
§5.      Minor Business not Requiring Notification
§5-2. Report
§5-3. Notification of Stock Acquisition


II-2.    Supervision of Business
§5-4. Securities Deemed Reserve Requirement Assets
§6.      Ceiling on Borrowings
§7.      Restriction on Acquiring Collateral
§7-2. Scope of Deposit Taking Financial Institutions
§8.      Current Account
§8-2. Scope of Purchasable Securities
§8-3. Securities without Investment Restriction
§9.      Restriction on Holding Securities
§10.     Approval Standard for Purchase of Stocks of MSB
§10-2.          Restriction on Purchasing Shareholders' Notes
§11.     Scope of Operational Real Estate
§12.     Holding Reserve Assets for Payment


II-3.    Supervision on Soundness
§13.     Asset Classification
§13-2.          Risk Management System
§13-3.          Risk Management Organization
§13-4.          Risk Management Regulation
§14.     [Deleted]
§15.     Liquidation Procedures
§16.     Accounting Standards
§16-2.          Recognition of Transferred Loss as Goodwill

§17.     Management Disclosure
III.     Management Performance Evaluation and Prompt Corrective Action
§17-2.          Soundness Ratios
§17-3.          Management Performance Analysis and Evaluation
§17-4.          Management Improvement Recommendation
§17-5.          Management Improvement Request
§17-6.          Management Improvement Order
§17-7.          Postponement of Prompt Corrective Action
§17-8.          Submission and Evaluation of the Management Improvement
Plan
§17-9.          Implementation of Management Improvement Plan
§17-10.                Emergency Measures


IV.      Due Diligence for Determination of Insolvent Mutual Savings Banks
§17-11.         An MSB Subject to Due Diligence
§17-12.         Scope of Evaluation
§17-13.         Standards of Evaluation
§17-14.         Evaluation procedures
§17-15.         Grounds for Commission of Auditor Designation


V.       Examination and Internal Control
§18.     [Deleted]
§18-2.          [Deleted]
§19.     [Deleted]
§20.     Reinforcement of Internal Control


VI.      Supplementary Provisions
§21.     Proxy Exercise of Authority
§21-2.          Partial Consignment of Authority
§22.     Report on the Proxy Exercise of Authority
§22-2.          Report on the Exercise of Consigned Authority
§23.   Specifics


Addenda


                                                        Enacted on April 1, 1998
                                                     Amended on June 12, 1998
                                                   Amended on October 9, 1998
                                                 Amended on December 11, 1998
                                                    Amended on March 12, 1999
                                                    Amended on March 26, 1999
                                                     Amended on June 25, 1999
                                                   Amended on August 20, 1999
                                                 Amended on December 24, 1999
                                                     Amended on June 23, 2000
                                         Amended on July 20, 2000. FSC 2000-28
                                       Amended on October 6, 2000. FSC 2000-95
                                    Amended on November 15, 2000. FSC 2000-101
                                    Amended on December 29, 2000. FSC 2000-120
                                         Amended on April 27, 2001. FSC 2001-24
                                           Amended on July 3, 2001 FSC 2001-40
                                      Amended on August 22, 2001 FSC 2001-60
                                     Amended on November 13, 2001 FSC 2001-90
                                          Amended on April 2, 2002 FSC 2002-13
                                           Amended on May 1, 2002 FSC 2002-22
                                           Amended on July 4, 2002 FSC 2002-41
                                          Amended on July 12, 2003 FSC 2003-35




                             CHAPTER I.
                         GENERAL PROVISIONS

§1. Purpose
The purpose of this Regulation is to prescribe the details necessary for the
enforcement of the matters under the authority of the Financial Supervisory
Commission (hereinafter, "the FSC") in respect of the business operation
and supervision of mutual savings banks (hereinafter, "the MSB") pursuant
to the Mutual Savings Bank Act (hereinafter, "the Act"), its enforcement
decree (hereinafter, "the Decree"), its enforcement regulation (hereinafter,
"the Enforcement Regulation"), Act Concerning the Establishment of
Financial Supervisory Organizations (hereinafter, "the EFSOs Act"), its
enforcement decree, and any other relevant statutes thereof.

§2. General Guidelines
An MSB shall not at all engage in any business not authorized by the Act,
and shall thoroughly observe what is prescribed in its business
manual.<Revised December 29, 2000>

§3. Scope of Application
The business operation and supervision of MSB shall be governed by the
provisions of this Regulation unless prescribed by other statutes, the
Minister of Finance and Economy, or the FSC otherwise.

§4. Definitions
(1) Definitions of terms used in this Regulation shall be in accordance with
the statutes on MSB.
(2) The term "single interlinked enterprise" in this Regulation refers to an
enterprise corresponding to Article 30 paragraph (2) subparagraphs 4
through 7 of the Decree.<Revised June 23, 2000>
(3) The term "financial institution" in this Regulation refers to an institution
participating in the intermediation transactions by an intermediary under the
Merchant Banking Corporation Act.
(4) [Deleted December 24, 1999]
(5) [Deleted December 24, 1999]


                    CHAPTER II.
 AUTHORIZATION AND NOTIFICATION <Revised June 23, 2000>
§ 4-2.Authorization Standard for Branch Establishments "The standards
       determined by the FSC" prescribed in Article 5 paragraph (1)
       subparagraph 4 of the Decree corresponds to each of the following
       subparagraphs.
   1.The ratio of equity capital to risk weighted assets pursuant to Article
      17-2 paragraph (1) subparagraph 1 shall be at least 8/100.
   2.[Deleted]
   3.[Deleted]
   4.Ratio of loans classified as "substandard" or lower (referring to the ratio
      of the total sum of loans classified as "substandard," "doubtful," and
      "estimated loss" among those subject to asset classification with the
      exclusion of securities and other suspense payments) shall not exceed
      8/100.

§5. Minor Business not requiring Notification
"The case of amendment of the minor business determined by the FSC"
prescribed in Article 10-2 paragraph (1), subparagraphs 1 and 2 of the Act
refers to an MSB changing the standard articles of association and standard
business manual determined by the President of the Korea Federation of
Savings Banks(hereinafter "the President of the Federation") as its own
articles of association and business manual. <Revised June 23, 2000>

§5-2. Report <Added June 23, 2000>
An MSB shall report to the Governor of the FSS(hereinafter "Governor") or
the President of the Federation within a seven(7) day period from the day on
which the reason occurred prescribed in each item of Article 10-2 paragraph
(4) of the Act, pursuant to Article 26 paragraph (1) subparagraph 2-3 or
Article 26 paragraph (2) subparagraph 1-2 of the Decree.

§5-3. Notification of Stock Acquisition <Added April 27, 2001>
(1) The person who acquires stock prescribed in Article 10-2 paragraph (3)
of the Act shall notify the Governor of the fact within 10 days prior to the
scheduled date of the stock acquisition through the MSB.
(2) When the notification is submitted in accordance with paragraph (1), the
Governor shall notify the MSB and applicant whether it is accepted or not
within one day before the expected acquisition date of the stocks, after
reviewing falsehood or defect of notified items, and other documents
regarding the change of major shareholders. However, when the notification
of MSB needs to be amended, the Governor may return it for resubmission
after amendment.


                      CHAPTER II-2.
       SUPERVISION OF BUSINESS <Added June 23, 2000>

§5-4. Securities Deemed Reserve Requirement Assets
"The securities determined by the FSC" prescribed in Article 11 paragraph
(2) subparagraph 5 of the Decree corresponds to each of the following
securities certificates
(1) Debentures issued by the Korea Development Bank established under
the Korea Development Bank Act
(2) Debentures issued by the Industrial Bank of Korea established under the
Industrial Bank of Korea Act
(3) Debentures issued by the Export-Import Bank of Korea established
under the Export-Import Bank of Korea Act
(4) Depository insurance fund debentures issued by the Korea Deposit
Insurance Corporation established under the Depositors Protection Act
(hereinafter referred to as the Korea Deposit Insurance Corporation); and
(5) The Bad Credits Resolution Fund Debentures issued by the Korea Asset
Management Corporation (KAMCO) established under the Act on Effective
Management of Non-Performing Assets of Financial Institutions and
Establishment of KAMCO.

§6. Ceiling on Borrowings
(1) The borrowings pursuant to Article 17 paragraph (1) of the Act shall be
limited to those from financial institutions, the Korea Deposit Insurance
Corporation, or the Korea Federation of Savings Banks(hereinafter "the
Federation"), and the issuance of corporate bonds. <Revised June 23,
2000>
(2) The borrowings within the limit of three (3) times of the equity capital
pursuant to Paragraph (1) shall be deemed to be approved under Article 17
paragraph (1) of the Act.
(3) In case an MSB that has received a Governor's order necessitated by
supervision on its business pursuant to Article 22 paragraph (2) of the Act
and Article 26 paragraph (1) subparagraph 4 of the Decree fails to
implement it, paragraph (2), shall not apply, starting from the following
business year until the MSB implements the order. <Revised June 25,
1999>
(4) The amount of newly issued bond by an MSB for redemption of exiting
bonds shall not be deemed the borrowing pursuant to the provision of
paragraph (1). In this case, the bonds which are expected to be redeemed
shall be redeemed within one (1) month from the date of new issuance.
<Added June 23, 2000>
(5) The details with respect to the issuance of corporate bond prescribed in
paragraph (1) shall be in accordance with the Commercial Act and other
relevant statutes, unless this Regulation and the Governor specify
otherwise. <Added June 23, 2000>

§7. Restriction on Acquiring Collateral
(1) [Deleted June 23, 2000]
(2) A MSB shall not treat a loan, accepting stocks or investment certificates
of the MSB itself as collateral.

§7-2. Scope of Deposit Taking Financial Institutions
"Financial institutions determined and notified by the FSC" under Article 18
subparagraph 1 of the Act corresponds to the financial institutions stipulated
under the provisions of Article 2 subparagraph 1 of the Depositor Protection
Act.

§8. Current Account
(1) An MSB shall not issue promissory notes or checks with a bank as the
payee
(2) Notwithstanding the provision of paragraph (1), this shall not apply to the
case of borrowing, making a withdrawal, or issuing cover notes from
financial institutions, the Korea Deposit Insurance Corporation, or the
Federation.

§8-2. Scope of Purchasable Securities
The securities which an MSB can purchase using surplus funds pursuant to
Article 18 paragraph (2) of the Act shall be any of the following items
   1.Securities mentioned in Article 11 paragraph (2) of the Decree;
   2.Listed securities at the Korea Stock Exchange (KSE) under the
      Securities and Exchange Act
   3.Registered securities at the KOSDAQ under the Securities and
      Exchange Act
   4.Unlisted and unregistered stocks approved by the Governor and traded
      pursuant to the Regulation on Supervision of Securities Business
      prescribed by the FSC.
   5.Notes or bonds issued or sold by a merchant bank under the Merchant
      Banking Corporation Act
   6.Beneficiary certificates issued by a management company under the
      Securities Investment Trust Act or by a trust company under the Trust
      Business Act (excluding beneficiary certificates applicable the
      provisions of Article 33 paragraph (2) of the Securities Investment
      Trust Act).
   6-2. Securities issued by securities investment companies under the
      Securities Investment Company Act (excluding securities issued by
      securities investment companies applicable under Article 79
      paragraph (1) of the Securities Investment Company Act).
   7.Debentures issued by a financial institution under the Banking Act
   8.The securities approved by the Governor among stocks or certificates
      of contribution issued by other MSBs, notes or similar items that are
      issued, mediated, or sold by a financial institution.
§8-3. Securities without Investment Restriction
(1) Those determined by the FSC prescribed in Article 18-2 subparagraph 1
of the Act corresponds to each of the following securities.
   1.Securities prescribed in each subparagraph of Article 11 paragraph (2)
       of the Decree
   2.Securities falling under the deposits, etc. mentioned in Article 2
       subparagraph 2 of Depositors Protection Act.
   3.Beneficiary certificates issued under Securities Investment Trust Act,
       with stock investment ratio 30/100 or less, determined in standard
       terms and conditions. (limited to those whose period of collecting
       termination fee or period of redemption is less than three months.)
       <Revised December 29, 2000>
   4.Securities acquired through the exercise of collateral rights.
   5.Securities of other MSB acquired pursuant to Article 9 paragraph (2).
       <Revised April 27, 2001>
   6.Subordinated asset securitization debentures acquired in accordance
       with asset securitization plan of an MSB prescribed in the Asset
       Securitization Act.
   7.Stocks or investment certificates (including convertible bonds) acquired
       by debt equity swaps undertaken with respect to a company for which
       commencement of reorganization proceedings has been ordered
       pursuant to the Company Reorganization Act; a company for which
       commencement of composition has been ordered pursuant to the
       Composition Act; a company undergoing workout program in
       accordance with agreement reached for promoting corporate
       restructuring; a company undergoing rehabilitation process jointly by
       financial institutions; or a company for which industrial rationalization
       has been designated pursuant to the Restriction of Special Taxation
       Act.
   8.Bills or notes purchased pursuant to Article 9 paragraph (1)
       subparagraph 6.
(2) Among the securities acquired through the exercise of the collateral
rights pursuant to paragraph (1) subparagraph 4, whatever do not fall under
subparagraph 1 through subparagraph 3 shall be disposed of within one (1)
year from the date of acquisition.

§9. Restriction on Holding Securities
(1) An MSB shall observe the following ceilings when it purchases and holds
securities prescribed in Article 18 paragraph (4) and Article 18-2 of the Act:
<Revised December 29, 2000>
1.The sum of the listed stocks (the securities pursuant to Article 8-2
   subparagraphs 2 through 4 and subparagraph 6-2 shall be within
   40/100 of the equity capital. <Revised December 29, 2000>
2.Where securities options and securities index futures are traded
   pursuant to Article 2 paragraph (1) subparagraph 9 and Article 2-2
   paragraph (2) of the Securities and Exchange Act, the sum of the
   consignment margin shall be within 5/100 of the equity capital.
   However, it is restricted for the cases of hedging the investment risks
   caused by stock investments of the MSB.
3.Stocks of the same company (excluding stock prescribed in Article 8-2
   subparagraph 6-2 shall be within 10/100 of the total issued stocks of
   the company or 10/100 of the equity capital. However, this shall not be
   applied to stocks and investment certificates prescribed in Article 8-3
   subparagraph 7.
3-2.         Bonds of the same company shall be within 10/100 of the
   equity capital. However, this shall not be applied to convertible bonds
   prescribed in Article 8-3 subparagraph 7.
4.Stocks of a single linked enterprise of the MSB shall be within 5/100 of
   the equity capital.
5.Notes issued by financial institutions shall be within the ceiling
   prescribed in the main clause of subparagraph 3-2 and subparagraph
   4
6.Notes (prescribed in Article 3-2 paragraph (2) subparagraph 2 of the
   Decree) sold or intermediated by securities companies, merchant
   banking corporations and intermediary shall be within the ceiling
   pursuant to Article 9 of the Decree.
7.Unlisted and unregistered stocks traded pursuant to Article 5-47
   through Article 5-49 of the Regulation on Supervision of Securities
   Business shall be within 5/100 of the total issued stock of the company
   and 5/100 of the equity capital, only where an MSB organizes and
   operates a risk management committee pursuant to Article 13-3 of the
   Act.
8.Stocks (inclusive of investment certificates) of other MSB shall be
   within 80/100 of the equity capital and 15/100 (100/100, when merging
   with other MSB(s) within six months from the date of purchase) of the
   total issued stocks of the MSB. <Revised April 27, 2001>
9.Stocks of a newly established MSB to receive contract transfer
   pursuant to Article 24-9, Article 24-11 and Article 24-15 of the Act, and
   Article 10 and Article 14 of the Act on Structural Improvement of
   Financial Industry shall be within 80/100 of the equity capital and
   15/100 of the total issued stocks of the MSB. <Revised December 29,
   2000>
(2) In the event purchasing securities within the ceilings of subparagraph 5
through 7 of paragraph (1), it shall be deemed to be approved by the
Governor pursuant to Article 8-2 subparagraph 8. But purchases of
securities by an MSB prescribed in subparagraphs 8 and 9 of paragraph (1)
shall be approved by the Governor case by case. <Revised December 29,
2000>

§10. Approval Standard for Purchase of Stocks of MSB
The Governor shall, when he or she intends to approve the purchase of the
securities prescribed in Article 9 paragraph (1) subparagraph 8, consider
whether the MSB meets the following requirements: <Revised December
29, 2000>
   1.The ratio of equity capital to risk weighted assets of an MSB shall be
      10% or above as of the latest settlement date or purchase application
      date, 6% or above as of after purchasing stocks in consolidated
      standard, or archiving 6% or above in a specific period. <Revised
      December 29, 2000>
   2.[Deleted June 23, 2000]
   3.Sales contract for the stocks shall be fair and not violate any related
      statutes.

§10-2. Restriction on Purchasing Shareholders' Notes <Added December
       29, 2000>
In case of purchasing commercial notes, which are issued or endorsed by a
person under each of the subparagraph prescribed in Article 37 of the Act
(hereinafter "shareholders") from a third-party, an MSB shall maintain the
total amount of note purchase within 20/100 of the equity capital.

§11. Scope of Operational Real Estate
(1) Operational real estate in Article 18-2 subparagraph 2 of the Act shall
refer to any of the following items: <Revised June 25, 1999>
   1.Place of business (when at least 10/100 of the total floor space is
      directly used for the business operation);
   2.The real estates used directly as residence, dormitory, common
      residence, and training center for employees.
(2) MSB shall, when it intends to enter into a contract on transfer and
acquisition of real estate with shareholders, obtain an approval from the
Governor. <Revised December 29, 2000.>

§12. Holding Reserve Assets for Payment
(1) An MSB shall hold each of the following amounts as reserve assets for
payment prescribed in Article 15 of the Act in the forms of cash, deposits,
savings, or securities.
    1.Mutual installment savings and installment deposits: at least 10/100 of
       the sum of the received mutual installment savings (net of installment
       payment) and installment deposits
    2.Deposits other than item in subparagraph 1: at least 5/100 of the
       amount obtained by subtracting its equity capital from the total
       received deposits;
(2) The reserve assets for payment shall be calculated on the basis of the
monthly average of the daily received mutual installment savings, installment
savings, deposit balances throughout the whole of the head and branch
offices, and shall be deposited by the 10th day of the next month.


                        CHAPTER II-3
       SUPERVISION ON SOUNDNESS <ADDED JUNE 23, 2000>

§13.    Asset Classification
(1) An MSB and Federation (hereinafter "MSB" in this Article and Article
13-2) shall classify the following assets on a regular basis, and shall
accumulate and maintain adequate reserves for loss provisioning (including
allowance for payment guarantees; the same hereinafter) pursuant to Article
13-2. For the Federation, however, the asset classification shall be limited to
its payment reserve deposit accounts.
    1.Loans under the regulation on MSB business accounting
    2.Securities
    3.Suspense payment and account receivables
    4.Determined payment guarantees <Revised entirely June 23, 2000>
(2) The soundness of assets prescribed in paragraph (1) shall be classified
into five categories in accordance with detailed standards determined by the
Governor: "normal, precautionary, substandard, doubtful", and "estimated
loss"; however, in the case of securities, the category "substandard" shall be
excluded, and in the case of suspense payment (excluding suspense
payment for loan), categories "precautionary" and "substandard" shall be
excluded. <Revised December 29, 2000>
(3) The bad loans mentioned in Article 2 subparagraph 5 item c of the Act
refer to loans classified as doubtful or estimated loss pursuant to paragraph
(2), and in this case, deducting the related loss provisions for bad debts as
of the date of calculation. <Revised December 29, 2000>
(4) Among the assets prescribed in paragraph (1), an MSB shall classify
loans on the basis of total debentures of each debtor and classify the other
assets on the basis of each transaction. However, when the Governor
determines separate standards, loans can be classified separately from the
debtor-wise total debentures classification. <Revised December 29, 2000>
(5) An MSB shall write off its assets classified as doubtful or estimated loss
pursuant to paragraph (2), (hereinafter "bad assets") as soon as possible
and shall make a list table as designated by the Governor for assets
classified below the category "substandard" and take measures for the early
normalization of them. <Revised December 29, 2000>
(6) The Governor may require such MSB to write off the specific
non-performing assets when he deems that the write-off performance of
the non-performing assets of an MSB is insufficient or necessary.
(7) [Deleted]
(8) An MSB shall calculate the expected recovery from collateral for the
loans below the category "substandard" pursuant to the standards
determined by the Governor, for each asset soundness classification.
<Added December 29, 2000>

§13-2. Loss Provisioning Standards
(1) Standards for accumulating reserves for loss provisioning for mutual
savings bank are as follows.
   1.An MSB shall accumulate reserves of the following amounts for loss
      provisioning purposes in accordance with the results of asset
      classification as of the date of account settlement (with the inclusion of
      provisional closing date for the first half of the year; hereinafter as
      such in this Article).
      a. At least 0.5/100 of assets classified as "normal" assets
      b. At least 2/100 of assets classified as "precautionary"
      c. At least 20/100 of assets classified as "substandard"
      d. At least 75/100 of assets classified as "doubtful"
      e. At least 100/100 of assets classified as "estimated loss"
   2.Notwithstanding the provisions of subparagraph 1, loan loss reserves
      may not be accumulated where borrower(s) are the Government or
      local governments, or where call loans between the banks are
      classified as "normal".
   3.An MSB shall, concerning the asset assignment account receivable
      and subordinated debentures in accordance with asset securitization
      plan,      accumulate adequate amount comparing with asset
       classification and level of loan loss reserves, and considering the
       valuation of assignment price and a prior·subsequent right issue
       ratio.
    4.An MSB shall, concerning the principal payment guarantee as of the
       date of accounts settlement, accumulate the amounts set forth in the
       following items as the payment guarantee reserves according to the
       result of asset classification.
       a. At least 20/100 of the principal payment guarantees classified as
       "normal"
       b.At least 75/100 of the principal payment guarantees classified as
           "doubtful"
       c. 100/100 of the principal payment guarantees classified as
           "estimated loss"
(2) The Governor may, concerning the MSB in question, require the
accumulation of the amount of expected loss into special loan loss reserves
in the event a financial incident prescribed under the provisions of Article 17
paragraph (5) subparagraph 2 occurs, notwithstanding the provisions of
paragraph (1).
(3) In the event asset classification of the expected loss is figured after
special loss reserves has been made under paragraph (2), such a reserve
can be exchanged and accumulated pursuant to the provisions of paragraph
(1).
(4) The Governor may, concerning payment reserve deposit accounts of the
federation, allow other standards for accumulation of loan loss reserves,
notwithstanding paragraph (1).

§13-3. Assets for Loan Loss Reserves
"Assets for loan loss reserves" stipulated under Article 13-2 paragraph (1)
subparagraph 1 are as follows.
   1.Loans prescribed under Article 13 paragraph (1) subparagraph 1
      (including subordinated debentures acquired in accordance with asset
      securitization plan of an MSB).
   2.Account receivable (asset disposal account receivable and asset
      assignment account receivable in accordance with asset securitization
      plan).

§13-4. Risk Management System <Added December 24, 1999>
(1) For prevention and efficient management of risks along with various
business operation, an MSB shall build and operate a comprehensive
risk management system, which can recognize, assess, monitor, and control
the corresponding risk.
(2) For efficient risk management, an MSB shall set up and operate an
adequate risk-bearing ceiling and transaction limit by departments or
transactions.

§13-5. Risk Management Organization
(1) The board of directors of an MSB shall deliberate and decide on the
matters necessary for risk management, such as approval of policies and
strategies on risk management, and establishment and revision or
regulations on risk management.
(2) For efficient performance of the approvals and decisions on risk
management, an MSB shall establish and operate the risk management
committee (hereinafter, "the committee"), which shall conduct the business
under any of the following subparagraphs.
   1.Establishment of policies and strategies on risk management.
   2.Decision on bearable risk levels
   3.Determination of risk ceilings and approval of exceeding the ceilings.
   4.Report to the board of directors on the matters approved or decided by
      the committee.
(3) An MSB shall set up a risk management unit for comprehensive
management of the risks which may occur in its business and support of the
board of directors As for an MSB the with the total assets of less than 2
hundred billion won, however, existing unit(s) or person(s) in charge may
undertake this duties.

§13-6. Risk Management Regulation <Added December 24, 1999>
An MSB and the Federation shall formulate and operate internal regulation
or standards, which contain basic standards for risk management,
organization and procedure, ceilings management, internal control and risk
assessment, and management system, etc. in accordance with their specific
needs and circumstances.

§14. [Deleted December 11, 1998]

§15. Liquidation Procedures
The Governor may prescribe the specific procedures of liquidation for its
efficient implementation pursuant to Article 23-11 of the Act.

§16. Accounting Standards
(1) With respect to accounting procedures and the preparation of financial
statements, an MSB shall comply with this Regulation and the Accounting
Procedure for Mutual Savings Bank prescribed by the Securities and
Futures Commission.
(2) The detailed criteria concerning accounting treatment, kinds and
presentation order of accounting titles other than those determined in this
Regulation and Accounting Procedure for Mutual Savings Bank under
paragraph (1), shall be mandated by the Governor. [Revised entirely
December 24, 1999.]
(3) The Federation shall report to the Governor on the following matters
pertaining to its payment reserve deposit accounts, conforming to the
specific formats prescribed by the Governor, by the tenth day from the end
of each quarter.
   1.Financial status;
   2.Asset classification results;
   3.Current status of loan collecting operation; and
   4.Other matters related to the earnings from, and operation of its
      payment reserve deposit accounts. <Added June 23, 2000>
(4) The detailed items pertaining to the payment reserve deposit accounting
of the Federation, which are not prescribed under the Corporate Financial
Accounting Standards, shall be mandated by the Governor. <Added June
23, 2000>

§16-2. Recognition of Transferred Loss as Goodwill <Added June 25, 1999>
(1) An MSB, corresponding to each of the following items, is able to
recognize transferred loss as goodwill, which resulted from contract transfer.
     1.An MSB to which contract(s) has been transferred pursuant to Articles
         24-9 and 24-11 of the Act, or Article 10 paragraph (1) and Article 14
         paragraph (2) of the Act on the Structural Improvement of Financial
         Industry. <Revised December 24, 1999>
     2.An existing or newly established MSB, which merged with the MSB
         prescribed in subparagraph 1, pursuant to Article 4 of the Act on
         Structural Improvement of Financial Industry
(2) Pursuant to Article 63 of the Corporate Financial Accounting Standards,
the goodwill under paragraph (1) shall be written off with the straight line
method over a period not exceeding twenty years from the fiscal year when
it is first recognized into account.

§17. Management Disclosure
(1) [Deleted December 24, 1999]
(2) A MSB must disclose the matters prescribed by each of the following
subparagraphs within three (3) months from the settlement date. However,
disclosure on the result of the first half-year settlement shall be made within
two months from the settlement date of the first half year.
    1.Matters prescribed in Article 13 paragraph (1) subparagraphs 1 through
       4 of the Decree;
    2.Matters on management indicators regarding soundness, profitability,
       productivity, and etc.
    3.Matters significantly influencing management such as management
       policy, and risk management, that are separately required by the
       Governor. <Revised entirely June 23, 2000>
(3) A MSB shall disclose matters such as terms and conditions of contract
for financial transactions to protect the interests of users.
(4) Specific disclosure items and procedures for the matters prescribed
under paragraphs (2) and (3) shall be determined pursuant to the Uniform
Operation Disclosure Standards for Mutual Savings Banks and Uniform
Products Disclosure Standards for Mutual Savings Banks prescribed by the
Chairman of the Federation.
(5) In the event any one of the following subparagraphs applies to the
detriment of sound management or any foreseeable detriment thereof, an
MSB shall disclose relevant matters.
    1.When new bad loans are incurred which exceed 10/100 of its equity
       capital against a single debtor, except when the amount reaches less
       than 500 million Won. <Revised December 29, 2000>
    2.When an MSB incurs, or is expected to incur, loss that exceeds 5/100
       of its equity capital as a result of financial accident(s) or crime(s)
       prescribed by the Governor pursuant to the Regulation on Examination
       and Sanctions Against Financial Institutions, except when either the
       amount of loss is less than 200 million Won or the Governor
       announces the results of his or her investigation into the financial
       accident(s) or crime(s).
    3.Matters prescribed under Article 13 paragraph (1) subparagraph 5 of
       the Decree <Revised June 23, 2000>
    4.Any cases of equivalent significance to subparagraphs (1) and (2), as
       prescribed by the Governor.
(6) The disclosure pursuant to paragraph (5) shall be executed by posting up
in the bulletin boards, or by any other appropriate methods of display, at its
places of business for more than one month, and the Governor shall be
notified of the disclosure information prior to the execution. <Revised
December 29, 2000>
(7) In the event an MSB makes disclosure(s) of matters prescribed under
paragraphs (2) through (6) without due diligence through false statement(s)
or omission(s) of material fact(s) or information, the Governor may require
the MSB of redisclosure(s) or correction(s). <Revised June 25, 1999>
(8) The Chairman of the Federation shall periodically check on, and give
guidance with respect to, the due execution of disclosure(s) by MSBs
pursuant to paragraphs (2), (3) and (5). <Added December 29, 2000>
21-2 (1) 3. Examination and guidance on, and request for correction(s) of
any deviation from, due compliance with the disclosure requirement(s)
pursuant to Article 17 paragraphs (2), (3) and (5).


                    CHAPTER III.
        MANAGEMENT PERFORMANCE EVALUATION
   AND PROMPT CORRECTIVE ACTION <Added June 12, 1998>

§17-2. Prudential Ratios
(1) An MSB shall maintain the prudential ratios prescribed under the
following subparagraphs.
    1.Ratio of equity capital to the risk-weighted assets : 5/100 or above ; and
    2.Ratio of loan loss provision : 100/100 or above; and3.          Ratio of
       retirement payment reserve : 100/100 or above.
(2) The Governor shall determine the standards for calculating the prudential
ratios under paragraph (1), and may prescribe any other ratios adjudged as
necessary for ensuring the sound management of MSBs.

§17-3. Management Performance Analysis and Evaluation
(1) Pursuant to the provisions of Article 23 paragraph (2) of the Act and
Article 26 paragraph (1) subparagraph 4 of the Decree, the Governor shall
analyze the management performance of an MSB and thereby supervise the
soundness of management practice. <Revised December 24, 1999, June
23, 2000>
(2) The Governor may evaluate management performance through the
examination of an MSB, the results of which may be reflected in the
supervision and examination business.
(3) In the event the Governor determines that there exist(s) any cause(s) for
the deterioration of the soundness of management practice or for
management underperformance following the analysis and evaluation of
management performance pursuant to paragraphs (1) and (2), he or she
shall subject the MSB concerned to a more strengthened supervision and
examination, and when necessary, may require the MSB of submission(s) of
plan(s) or agreement(s) for management improvement, or conclude
memoranda of understanding on management improvement with the MSB.
<Revised June 23, 2000>
(4) The management performance evaluation pursuant to paragraph (2)
shall be conducted upon the head office of an MSB, with respect to such
criteria as its "capital adequacy," "asset soundness," "business management
capacity," "profitability," and "liquidity,", the evaluation results of which being
categorized into five ratings as first grade (strong), second grade
(satisfactory), third grade (mediocre), fourth grade (deficient), and fifth grade
(critically deficient), for each of the criteria separately as well as for the
overall performance of the MSB. <Added December 24, 1999>
(5) The specifics concerning the management performance analysis and
evaluation pursuant to paragraphs (1) through (4) shall be determined by the
Governor, wherein he or she may take into consideration the management
performance of companies that are subject to consolidation in calculating the
ratio of equity capital to the risk-weighted assets under Article 17-2
paragraph (1) subparagraph 1. <Revised December 29, 2000>

§17-4. Management Improvement Recommendation
(1) In the event an MSB is applicable under any one of the following
subparagraphs, the Governor shall subject such an MSB to the
implementation of the applicable recommendation(s) he or she issues.
    1.When the ratio of equity capital to the risk-weighted assets pursuant to
        Article 17-2 paragraph (1) subparagraph 1 falls under 5/100;
    2.When in receipt of fourth grade (weak) or below for the criteria of
        "capital adequacy" or "asset soundness", while in receipt of an overall
        rating of third grade (mediocre) or above following the management
        performance evaluation pursuant to Article 17-3 paragraphs (2) and
        (4); <Added December 24, 1999> and
    3.When an MSB is obviously adjudged to become applicable under
        subparagraph 1 or 2 as a consequence of the large scale financial
        accident(s) or bad loans. <Revised December 29, 2000>
(2) Recommendation(s) under paragraph (1) corresponds to either a part or
all of the measures under the following subparagraphs.
   1.Improvement in personnel management and organizational operation;
   2.Cost reduction;
   3.Enhancement in the efficiency of business offices administration;
   4.Restriction on investment in fixed assets, expansion into new business,
      or new contribution;
   5.Disposal of bad assets;
   6.Increase or decrease in capital;
   7.Restriction on distribution of dividends; and
   8.Allocation of special loan loss provision.
(3) When issuing recommendation(s) pursuant to paragraph (1), the
Governor may take such measures as "precaution" or "warning" against and
MSB or executive officer(s) related thereof. <Added March 26, 1999>

§17-5. Management Improvement Requirement
(1) In the event an MSB is applicable under any one of the following
subparagraphs, the FSC shall subject such an MSB to the implementation of
the applicable requirement(s) it issues. <Revised December 29, 2000>
   1.When the ratio of equity capital to the risk-weighted assets pursuant to
      Article 17-2 paragraph (1) subparagraph 1 falls under 3/100;
   2.When in receipt of an overall rating of fourth grade (deficient) or below
      following the management performance evaluation pursuant to Article
      17-3 paragraphs (2) and (4); <Added December 24, 1999>
   3.When an MSB is obviously adjudged to become applicable under
      paragraph (1) or (2) as a consequence of large scale financial
      accident(s) or bad loans; <Revised December 29, 2000>
   4.When an MSB in receipt of management improvement
      recommendation(s) pursuant to Article 17-4 fail to implement its
      management improvement plan(s) with due diligence. <Revised
      December 29, 2000>
(2) Requirement(s) under paragraph (1) corresponds to either a part or all of
the measures under the following subparagraphs.
   1.Closure·consolidation of exiting branch offices or restriction on opening
      of new branch offices;
   2.Downsizing of organization; <Revised March 26, 1999>
   3.Restriction on holding risky assets and disposal of such assets;
   4.Restriction on interest rate of deposit;
   5.Liquidation of subsidiaries;
   6.Requiring replacement of executive officer(s); <Revised March 26,
      1999>
   7.Partial suspension of business operation;
   8.Merger or entry into the subsidiaries of financial holding companies
      (hereinafter, "FHC") (inclusive of the cases of attaining the status of
      subsidiaries after establishing the FHC independently or jointly with
      other financial institutions), acquisition by a third-party, or transfer of all
      or part of business ; <Revised December 29, 2000> and
   9. Matters under Article 17-4 paragraph (2).

§17-6. Management Improvement Order
(1) In the event an MSB is applicable under any one of the following
subparagraphs, the FSC shall subject such an MSB to the implementation of
the applicable order(s) it issues. <Revised December 29, 2000>
   1.When the ratio of equity capital to the risk-weighted assets pursuant to
       Article 17-2 falls under 1/100; <Revised December 11, 1998>
   2.When an MSB becomes an insolvent financial institution pursuant to
       Article 2 subparagraph 3 of the Act on the Structural Improvement of
       Financial Industry (hereinafter, "insolvent financial institution");
       <Revised March 26, 1999>
   3.When the normal operation of an MSB seems to be difficult because
       such an MSB does not, or can hardly, implement the material matters
       of its management improvement plan, even though it has been urged
       to do so pursuant to Article 17-8 paragraph (7) after such MSB, which
       had received the management improvement requirement pursuant to
       Article 17 paragraph (5), has failed to do so. <Revised March 26,
       1999>
(2) The necessary measures mentioned in paragraph (1) corresponds to
those applicable under all or part of the following subparagraphs. However,
the measures such as suspension of all business, assignment of all
business, transfer of all contracts and disposal of all the stocks shall be
limited to the cases where such MSB is an insolvent financial institution
mentioned in paragraph (1) subparagraph 2, or it falls under the standard
mentioned in paragraph (1) subparagraph 1, and it is certain to damage the
sound credit order or the right and interest of depositors. <Second Clause
Added March 26, 1999>
   1.Disposal of all or part of the issued stocks;<Revised March 26, 1999>
   2.Suspension of duties of officers and appointment of administrator;
   3.Merger or entry into the subsidiaries of FHC (inclusive of the cases of
      attaining the status of subsidiaries after establishing the FHC
      independently or jointly with other financial institutions); <Revised
      December 29, 2000>
   4.Transfer of all or part of business;
   5.Acquisition of the MSB by a third party;
   6.Suspension of business for within a six months period ; <Added March
       26, 1999>
    7.Transfer of all or part of contracts; and <Added December 11, 1998>
    8.Matters under Article 17-5 paragraph (2).
(3) In the event an MSB becomes an insolvent financial institution
(hereinafter, "insolvent MSB") and is applicable under any one of the
following subparagraphs, the FSC may subject such an insolvent MSB to
such measures as, but not limited to, transfer of contract(s), suspension of
business for within a six months period, or revocation(s) of authorization(s)
or license(s) for business. When an insolvent MSB applicable under
subparagraph 1 is no longer an insolvent MSB, the preceding clause shall
not be applicable. <Revised March 26, 1999; revised December 24, 1999>
   1.When an MSB does not, or cannot, implement the management
     improvement order(s) pursuant to paragraph (1); <Revised March 26,
     1999> and
   2.When it is adjudged difficult to implement the management
     improvement order(s) because its liabilities far exceed the assets, or
     when emergency measures are adjudged necessary for the depositors
     protection purposes. <Revised March 26, 1999>

§17-7. Postponement of Prompt Corrective Action
Supervisors may postpone a prompt corrective action for a specified period
of time when recognizing that an MSB under Article 17-4 paragraph (1),
Article 17-5 paragraph (1), or any subparagraphs of Article 17-6 paragraph
(1) has clearly met the standards through the increase in its capital or sale of
its assets, that it will probably satisfy such standards within a short period of
time, or that there are some reasons corresponding thereto. <Revised
December 29, 2000>

§17-8. Submission and Evaluation of the Management Improvement Plan
(1) An MSB in receipt of management improvement recommendation(s),
management improvement requirement(s), or management improvement
order(s) pursuant to Articles 17-4., 17-5, or 17-6 respectively (hereinafter,
"management improvement measure(s)") shall submit plan(s) (hereinafter,
"management improvement plan") reflecting measure(s) taken to the
Governor within a timeframe specified by the issuer within one month from
the date such measure(s) are taken.
(2) The proper authority shall decide on the approval of the plan(s)
submitted pursuant to paragraph (1) within one month from such
submission(s). <Revised December 29, 2000>
(3) For the issuance of a management improvement recommendation,
requirement, or order pursuant to the provisions of Article 28 through Article
30, the Governor shall receive a review of the Management Assessment
Committee comprised of outside professionals in advance prior to making an
approval decision pursuant to the provisions under paragraph (2). This,
however, shall not apply in the event of emergency or deliberation deemed
unnecessary by the Governor.
(4) In the event an MSB in receipt of management improvement
recommendation(s) does not submit management improvement plan(s)
pursuant to paragraph (1), or when such plan(s) submitted fails to prove
feasible, the Governor shall disapprove it(them), and shall require
implementation of measure(s) partially or entirely applicable under Article
17-5 paragraph (2). <Revised December 29, 2000>
(5) In the event an MSB in receipt of management improvement
requirement(s) does not submit management improvement plan(s) pursuant
to paragraph (1), or when such plan(s) submitted fails to prove feasible, the
FSC shall disapprove it(them), and shall require implementation of
measure(s) partially or entirely applicable under Article 17-5 paragraph (2).
In case of subsequent noncompliance, the FSC may issue management
improvement order(s) pursuant to Article 17-6. <Revised December 29,
2000>
(6) In the event an MSB in receipt of management improvement order(s)
does not submit management improvement plan(s) pursuant to paragraph
(1), or when such plan(s) submitted fails to prove feasible and is(are)
disapproved, the FSC may require implementation of measure(s) partially or
entirely applicable under the Article 17-6 paragraph (2) within a time frame it
prescribes. <Revised December 29, 2000>
(7) An MSB in receipt of the approval(s) of its management improvement
plan(s) pursuant to paragraph (2) shall submit to the Governor a quarterly
report on the progress in implementation of the approved plan(s) by the
tenth day of each new quarter, whereby the Governor shall examine the
implementation results, and when it is adjudged insufficient or its further
implementation is likely impractical due to modification(s) in relevant
system(s), the Governor may take measure(s) necessary such as including,
but not limited to, demanding full implementation of the approved plan(s)
within a time frame it prescribes or requiring of modification(s) of the plan(s).
However, when demanding implementation or requiring of modification(s) of
management improvement plan(s) to an MSB in receipt of management
improvement requirement(s) or management improvement order(s), the
Governor shall submit a prior report to the FSC. <Revised December 29,
2000>
(8) The Governor shall determine specific matters pertaining to the
organization and operation of the Management Assessment Committee
under paragraph (3).
§17-9. Implementation of Management Improvement Plan
(1) The implementation period for the management improvement plan of an
MSB in receipt of a management improvement recommendation shall be
within six months from the date of the approval of the plan, and as for an
MSB in receipt of a management improvement requirement it shall be within
one year from the date of the applicable approval, and as for an MSB in
receipt of a management improvement order the implementation period shall
be determined by the FSC. <Revised December 29, 2000>
(2) In the event of an early successful implementation of the management
improvement plan by an MSB in receipt of management improvement
measure(s) through such means as increase(s) in capital or resolution(s) of
non-performing loans, as a consequence of which the MSB has achieved a
significant management rehabilitation, the proper authority may alleviate the
degree(s) of the measure(s) required or waive any further implementation.
<Revised December 29, 2000>
(3) In the event the implementation period expires and the management of
an MSB in receipt of management improvement measure(s) is adjudged
sufficiently rehabilitated, the proper authority shall notify the MSB of the
termination of the measure(s) taken. In the event the management
performance of an MSB is applicable under Article 17-4 paragraph (1),
Article 17-5 paragraph (1) or Article 17-6 paragraph (1), the proper authority
shall take a separate and corresponding management improvement
recommendation(s), management            improvement      requirement(s)   or
management improvement order(s). <Revised December 29, 2000>

§17-10. Emergency Measures
(1) In the event an MSB is applicable under any one of the following
subparagraphs, whereby detriment of the interest of depositors is highly
warranted, the FSC may take emergency measure(s) to eliminate the risk(s)
involved therein.
   1.When an MSB faces such circumstance(s) as including, but not limited
     to, deficiency of reserve or reserve assets for deposit payment or debt
     redemption incapacity, as a result of a radical deterioration in its
     liquidity;
   2.When normal business operation of an MSB is deemed impossible or
     impractical, due to such unforeseen accident(s) as, but not limited to,
     temporary closure of business, suspension of business operation, a
     run on deposit withdrawals or labor dispute(s); and
   3.When bankruptcy of an MSB is imminent or when it is on a deposit
     payment default.
(2) Emergency measure(s) in paragraph (1) corresponds to either a part or
all of the measures under the following subparagraphs.
   1.Restriction on deposit receipt(s) or credit extension(s);
   2.Complete or partial suspension of deposit payments;
   3.Prohibition of debt servicing act(s); and
   4.Disposal of assets.

                          CHAPTER IV.
             DUE DILIGENCE FOR DETERMINATION OF
              INSOLVENT MUTUAL SAVINGS BANKS
                      <Added June 12, 1998>

§17-11. An MSB Subject to Due Diligence
(1) An MSB subject to the assessment and evaluation of assets and
liabilities (hereinafter, "due diligence") for the determination of an insolvent
MSB shall be applicable under any one of the following subparagraphs.
<Revised December 11, 1999>
   1.An MSB whose liabilities will likely exceed its assets, according to the
      judgement of the Governor, as a consequence of the culmination(s) of
      such adverse development(s) as, but not limited to, large-scale
      non-performing loans or financial crime(s) or accident(s) resulting in
      the deterioration of assets soundness; <Revised December 11, 1998>
   2.An MSB whose ratio of its equity capital to the risk-weighted assets
      pursuant to Article 17-2 is under 1.5/100; <Added March 26, 1999,
      revised December 24, 1999> and
   3.An MSB in receipt of an overall rating of fifth grade (critically deficient)
      following the management performance evaluation pursuant to Article
      17-3 paragraphs (2) and (4). <Revised December 24, 1999>

§17-12. Scope of Evaluation
While the subjects of the due diligence pursuant Article 17-11 shall in
principle include account headings of the assets and liabilities in the balance
sheets of an MSB as of the end of the latest month, the estimated
provisioning for assets (loan loss reserve, accumulated depreciation, and
other provisioning) in the liabilities shall be excluded from the due diligence.
<Revised December 11, 1998>

§17-13. Standards of Evaluation
(1) The assets and liabilities subject to the due diligence pursuant to Article
17-12 shall be evaluated based upon the criteria under each on of the
following subparagraphs.
   1.For account headings where the book value reflects the real value, the
      due diligence shall be based upon the book value;
   2.For account headings where the book value fails to reflect the real
      value, the due diligence shall be based upon the market value or the
      real value subtracted by the estimated amount of loss; and
   3.Annotations shall be recognized as liabilities after calculating the
      estimated amount of loss.
(2) The Governor determines specific standards for the due diligence
pursuant to paragraph (1).

§17-14. Evaluation procedures
The Governor may require an MSB subject to the due diligence of
submission(s) of material(s) or information necessary, and may also conduct
on site examinations for the due diligence purposes to the extent necessary.
<Revised December 11, 1998>

§17-15. Grounds for Commission of Auditor Designation
Overstated recognition of earnings or understated recognition of losses as
under Article 20 subparagraph 5 of the Decree corresponds to such cases
where overstatement of earnings (including overstatement of capital
adjustments) or understatement of losses exceeds 5/100 of equity capital or
500 million Won. <Added June 23, 2000>


                         CHAPTER V.
              EXAMINATION AND INTERNAL CONTROL

§18. [Deleted March 12, 1999]

§18-2. [Deleted March 12, 1999]

§19. [Deleted December 11, 1998]

§20. Reinforcement of Internal Control
(1) The Governor may determine matter(s) or issue(s) necessary for the
prevention of financial accident(s) and reinforcement of the internal control
of an MSB.
(2) [Deleted December 11, 1998]
                          CHAPTER VI.
                   SUPPLEMENTARY PROVISIONS

§21. Proxy Exercise of Authority
The authority of the FSC pursuant to Article 34-2 paragraph (1) of the Act
shall be exercised in proxy by the Governor.

§21-2. Partial Consignment of Authority
(1) Pursuant to Article 26 paragraph (2) subparagraph 2 of the Decree, the
authority of the FSC against an MSB with respect to matters under the
following subparagraphs shall be consigned to the Chairman of the
Federation.
   1.Inspection on the compliance of an MSB with the standard clauses and
      standard operation manual prescribed by the Chairman of the
      Federation, and request for correction(s) of any deviations therefrom;
   2.Examination and guidance on the compliance with the risk
      management system requirement(s) pursuant to Articles 13-4 through
      13-6;
   3.Examination and guidance on, and request for correction(s) of any
      deviation from, due compliance with the management disclosure
      requirement(s) pursuant to Article 17 paragraphs (2), (3) and (5).
   4.Monitoring and inspection on an MSB, whose management has been
      shifted during the last three years, or which has been in receipt of
      corrective measure(s) exceeding precaution(s) from the supervisory
      authority on account of its extension of loans to its investor(s);
   5.Inquiry into the information submitted under any report(s) to the
      Chairman of the Federation; and
   6.Inquiry and request of correction(s) necessary for the review of civil
      petition(s).
(2) The Chairman of the Federation may require the MSB concerned of
submission(s) of relevant information or material(s) necessary for the
execution of the consigned duties pursuant to paragraph (1).
(3) The Chairman of the Federation shall submit a quarterly report to the
Governor on the execution of the consigned duties pursuant to paragraphs
(1) and (2), and on acquiring any knowledge of such consequential facts as,
but not limited to, any statutory violation(s) of an MSB, the Chairman shall
immediately report to the Governor thereon.

§22. Report on the Proxy Exercise of Authority <Added December 29,
2000>
With respect to matters applicable under any one of the following
subparagraphs, wherein the Governor exercises the authority of the FSC in
proxy pursuant to Article 34-2 paragraph (1) of the Act, the Governor shall
report to the FSC on the major issues of relevance without delay.
   1.Appointment and dismissal (except when it is due to a completion of
      the liquidation process) of liquidator, and completion of the liquidation
      process pursuant to Article 23-11 of the Act;
   2.Commencement and termination of management control pursuant to
      Article 24-2 of the Act;
   3.Commencement, extension of period, termination of, and release from
      management control, and suspension of payment pursuant to Articles
      24-3, 24-4 and 24-7 of the Act;
   4.Authorization or decision of transfer of contract(s) pursuant to Article
      24-9 or 24-11 of the Act;
   5.Application for bankruptcy pursuant to Article 24-13 of the Act; and
   6.Transfer or merger of business operation or shares, pursuant to
      recommendation(s) or good offices under Article 24-15 of the Act.

§22-2. Report on the Exercise of Consigned Authority <Added December
       29, 2000>
With respect to matters applicable under any one of the following
subparagraphs, wherein the Governor exercises the authority of the FSC as
a consignee pursuant to Article 26 paragraph (1) of the Decree, the
Governor shall report to the FSC on the results of his or her exercise of the
authority on a quarterly basis, and at any time when matter(s) of significance
calls for immediate report(s).
   1.Recommendation of correction or completion pursuant to Article 10-2
      paragraph (2) of the Act;
   2.Approval of exception(s) to the restriction on borrowing pursuant to
      Article 17 of the Act;
   3.Supervisory order(s) pursuant to Article 22 paragraph (2) of the Act
      (restricted to such supervisory order(s) issued for correction(s) of
      matters subject to the inspection and analysis·evaluation of relevant
      material(s) pursuant to Article 23 of the Act); and
   4.Administrative measure(s) pursuant to each subparagraph (except
      subparagraph 4) of Article 24 paragraph (1) of the Act.

§23. Specifics
The Governor may determine the specifics required for enforcement of this
Regulation.


                                  Addenda

§1. Effective Date
This Regulation shall be effective on April 1. 1998.

§2. Provisions Repealed
Any regulations or instructions pertaining to the supervision of MSFCs,
which have been promulgated by the Governor of the Bank Supervisory
Service of the Bank of Korea or by the Chief Director of the Credit
Management Fund and have come into effect while this Regulation is in
effect, shall be repealed.

§3. Interim Measures With Respect To Previous Measures or Acts
Any supervisory measure(s) taken by the Minister of Finance and Economy,
Governor of the Bank Supervisory Service of the Bank of Korea, Chief
Director of the Credit Management Fund, or the Chairman of the Federation,
or any act(s) taken by an MSFC, pursuant to previous administrative
standards, notifications, regulations and instructions while this Regulation is
in effect, shall be viewed taken by the FSC, Governor of the Financial
Supervisory Service, Chairman of the Federation or an MSFC pursuant to
this Regulation respectively.

§4. Interim Measures Pertaining to the Authority of the Governor
Until the Financial Supervisory Service is established, 'Governor' under this
Regulation shall correspond to the Chief Director of the Credit Management
Fund.


                                  Addenda
                               (July 12, 1998)

§1. Effective Date
This Regulation shall be effective on June 12. 1998. However, Article 17-2
paragraph (1) subparagraph 2 and Articles 17-4 through 17-8 shall be
effective from December 31. 1998, while Article 17-3 shall be effective from
January 1. 2000.
§2. Interim Measures
With respect to an MSFC which is undertaking business operation
rehabilitation after having replaced an insolvent MSFC through transfer of
contract(s) pursuant to the Act and the Act on Credit Management Fund,
Articles 17-4 through 17-8 shall not be applicable until the expiration of the
rehabilitation period (period for approval of write-off(s) of goodwill) which has
been approved by the Minister of Finance and Economy.

§3. Preclusion
An MSFC in receipt of the management control pursuant to Article 24-3 of
the Act shall not be subjected to any prompt corrective action(s) pursuant to
this Regulation.


                                Addendum
                              (October 9, 1998)
This Regulation shall be effective on October 10. 1998.


                                Addendum
                            (December 11, 1998)
This Regulation shall be effective on December 12. 1998. However, Articles
17-4 through 17-9 shall be effective from December 31. 1998.


                            Addendum
 (March 12, 1999, Regulation on Supervision of Financial Institutions)
This Regulation shall be effective on March 12. 1999.
                                Addendum
                              (March 26, 1999)
This Regulation shall be effective on March 27. 1999.


                                  Addenda
                               (July 25, 1999)

§1. Effective Date
This Regulation shall be effective on June 26. 1999.
§2. Interim Measures Following Lump Sum Accumulation of Loan Loss
Reserve
Notwithstanding Article 17-2 paragraph (1) subparagraph 2, the ratio of loan
loss reserve shall be over 50/100 at the settlement of accounts in June
1999, and over 75/100 at the settlement of accounts in June 2000. This shall
not be applicable to the calculation of the ratio of equity capital to the
risk-weighted assets pursuant to Article 17-2 paragraph (1) subparagraph 1.

§3. Interim Measures With Respect To Recognition of Transferred Loss as
      Goodwill
Notwithstanding the revised provisions of Article 16-2, an MSFC in receipt of
the approval(s) of goodwill recognition and goodwill write-off period by the
Minister of Finance and Economy prior to this Regulation coming into effect
shall comply with the respective approval(s).


                               Addendum
                            (August 20, 1999)
This Regulation shall be effective on August 21. 1999.


                               Addenda
                          (December 24, 1999)

§1. Effective Date
This Regulation shall be effective on January 1. 2000. However, the
management performance evaluation pursuant to Article 17-3 paragraph (2)
shall be conducted from the first business year after this Regulation has
come into force.

§2. Submission of Mid-Long Term Plans
MSFCs and the Federation shall submit to the Governor by the end of
December 1999 mid-long term plans on the establishment and
administration of comprehensive risk management systems.

                               Addendum
                             (June 23, 2000)
This Regulation shall be effective on June 27. 2000. However, the revised
provisions of Articles 13 and 16 shall be effective from July 1. 2000.
                               Addendum
                             (October 6, 2000)
This Regulation shall be effective on the date of promulgation.

                              Addendum
                           (November 5, 2000)
This Regulation shall be effective on the date of promulgation.

                                Addenda
                           (December 29, 2000)

§1. Effective Date
This Regulation shall be effective on January 1. 2001.

§2, Interim Measures Pertaining To Purchase of Shares Issued By Other
MSFCs
  Notwithstanding the revised provisions of subparagraphs (8) and (9) of
Article 9 paragraph (1), any purchase undertaken prior to the effective date
       of this Regulation shall be governed by the previous regulation.
                                Addendum
                              (April 27, 2001)
This Regulation shall be effective on the date of promulgation.

                                Addendum
                               (July 3, 2001)
This Regulation shall be effective on the date of promulgation.


                                Addendum
                             (August 22, 2001)
This Regulation shall be effective on the date of promulgation.

                               Addendum
                           (November 13, 2001)
This Regulation shall be effective on the date of promulgation.


                                 Addenda
                               (April 2, 2002)

§1. Effective Date
This Regulation shall be effective on the date of promulgation (April 2,
2002). The amended provisions of Article 13-2, however, shall be effective
on June 30, 2002, whereas the amended provisions of Articles 17-2, 17-4
and 17-5 shall be effective on June 30, 2003.

§2. Interim Measures concerning Title amendment of Accounting Standard
     for Mutual Savings and Financial Business Industry
Accounting standards for mutual savings and finance business as of the
date of promulgation of this Regulation shall be regarded as accounting
standards for the mutual savings and bank business.


                                Addendum
                               (May 1, 2002)
This Regulation shall be effective on the date of promulgation.
                                Addendum
                               (July 4, 2002)
This Regulation shall be effective on the date of promulgation.


                                 Addenda
                              (June 13, 2003)

§1. Enforcement Date
This Regulation shall be effective on the date of promulgation.

§2. Respite on the Enforcement of the Amended Provisions

Notwithstanding Addendum §1 of the amended provisions dated April 2,
2002, the amended provisions of Article 17-2, Article 17-4, and Article 17-5
shall be effective on June 30, 2004.

								
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