Korea’s government ensures protection of Saemaul Geumgo depositors

Financial Services Commission (FSC) Chairman Kim Joo-hyun announces at a press conference held at the government office in Seoul on July 7. [Photo by Yonhap]

Financial Services Commission (FSC) Chairman Kim Joo-hyun has emphasized that the government will utilize all available policy tools to ensure that citizens who use Saemaul Geumgo do not suffer any property losses amid concerns of a potential bank run.

“We hope that people won’t have to endure property losses by withdrawing their deposits early out of anxiety,” Kim said during a press conference held at the government office in Seoul on Friday. “Saemaul Geumgo’s health and depositor protection are not compromised as long as there are no excessive outflows due to anxiety.”

Saemaul Geumgo, in accordance with the law, guarantees deposits of up to 50 million won ($38,000) per person, just like commercial banks. When there are concerns about the health of a particular branch, the government has protected deposits of up to 50 million per person by transferring all assets and liabilities to superior branches, Kim said.

“Historically, Saemaul Geumgo has never failed to pay customer deposits, even during more challenging financial crises such as the 1997 foreign exchange crisis.” He said that it is unreasonable to abandon contracted interest rates, tax benefits, and bear losses from premature termination due to unfounded anxiety.

Kim also cautioned that withdrawing deposits based on false information can not only result in property losses for depositors but also create difficulties for normal branches.

On Thursday, the government formed a joint response team involving the Ministry of the Interior and Safety, the Ministry of Economy and Finance, the Financial Services Commission, the Financial Supervisory Service, and the Bank of Korea. This unified approach signifies the government’s commitment to take responsibility and undertake all necessary measures, including financial support, to protect the assets of Saemaul Geumgo depositors, Kim stressed.