New governor overhauls South Korea's financial watchdog

FSS overhaul aims to cut bureaucracy and attract private sector talent

SEOUL- Kim Jong Chang, the new governor of South Korea’s Financial Supervisory Service (FSS), has initiated a major shake-up of the country’s chief financial regulator aimed at cutting bureaucracy, streamlining operations and attracting talent from the private sector.

The FSS will now operate through nine divisions, each headed by an assistant governor and a deputy governor, overseeing a total of 41 departments (down from 46 departments) and 204 teams, a reduction of 30 teams. The watchdog also expects to cut its staff by 10% by 2010, while raising the proportion of staff with private-sector experience to 25%.

The supervision and examination departments will be integrated into a single department to reduce overlap and cut compliance costs for financial institutions, said the FSS. Another major department will oversee financial holding companies. “The integration is expected to bring about significant improvement in the monitoring of financial holding companies’ intra-group activities and risks on a consolidated basis,” the regulator said in statement.

The tentatively named Capital Market Services Department will be charged with monitoring securities, investment funds and derivatives, as well as overseeing bond-rating and fund-valuation companies.

The FSS will also set up a unit for what it calls "macroprudential monitoring". The regulator will assign an unspecified number of new staff to carry out financial data collection and analysis, as well as to track financial market developments.