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Regulator calls on card firms to beef up risk management
제목 없음 South Korea's top financial regulator called on local credit card companies Tuesday to strengthen their risk management as banks' recent moves to halt household loans could raise demand for card loans.

   "Due to local banks' efforts to stem rising household debt, credit card loans could sharply increase, which is feared to hurt their financial asset quality," Financial Supervisory Service (FSS) Gov. Kwon Hyouk-se said in a meeting with nine heads from card companies and consumer financing firms.

   He said credit card companies need to beef up the risk management in order not to see a sharp rise in card loans as more people could scurry to non-bank financial institutions to borrow money.

   His remarks came as the financial watchdog is stepping up efforts to curb growing household debt, which reached 876.3 trillion won (US$815.6 billion) as of end-June.

   Several local banks plan to halt the extension of fresh household loans until Wednesday in a bid to join the regulator's efforts to curb household debt.

   Market watchers said banks' move to control loan growth is feared to prompt borrowers to rely on other financial institutions like card firms and non-bank institutions.

   The South Korean economy was hard-hit in 2003 when the credit card bubble burst following excessive issuance of plastic money.

   Mindful of the risks of a credit card boom, the financial regulator is seeking to limit credit card companies' total assets and new card issuance, as well as marketing costs.

   Kwon also emphasized that local card players should make efforts to prevent possible leaks of customer information.

   Concerns about online security breaches have heightened due to a series of hacking attacks on local financial firms and a popular Internet portal.

   Hackers struck the consumer finance firm Hyundai Capital Services Inc. and the National Agricultural Cooperative Federation, or Nonghyup, early this year, stealing customers' personal data and crippling online transactions.

Source: Yonhap News (August 30, 2011)

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