FSC chairman, “MG was always able to pay deposits even during the Asian financial crisis. There is no problem at MG”

Financial Services Commission Chairman Kim Joo-hyun speaks in a meeting with the press on the one-year anniversary of his inauguration in the joint briefing room at the government office in Jongno-gu, Seoul on the morning of July 7. Courtesy of the Financial Services Commission

Kim Joo-hyun, chairman of the Financial Services Commission (FSC), said, “As long as there is no excessive running of funds due to fear, there is no problem in the soundness and depositor protection of MG Community Credit Cooperatives.” He also stressed that even in more dire times, such as the 1997 Asian financial crisis, MG never failed to return their customers’ deposits.

In a meeting with the press on the first anniversary of his inauguration on July 7, Kim Joo-hyun said, “Although this meeting with the press was held on the one-year anniversary of my taking office, as the person who oversees the stability of the financial market, I think there is a need to give a clearer explanation on concerns of deposit withdrawals at MG Community Credit Cooperatives,” and reassured the public.

He said, “Our government will take advantage of all policy means available to make sure that MG customers do not suffer any loss of property,” and added, “I hope that the people will not suffer any loss of wealth by prematurely withdrawing their deposits out of fear.”

The Financial Services Commission chairman emphasized that MG customers have their deposits guaranteed for up to 50 million won per person, just like other banks, according to the Community Credit Cooperatives Act. He explained, “When there were concerns about the soundness of some cooperatives, the entire asset and debt owned by those cooperatives were transferred to sound cooperatives, and MG has protected deposits that even exceeded 50 million won.” He further mentioned that historically, MG had never failed to pay customers’ deposits even in tougher times, such as the 1997 Asian financial crisis.

The FSC chairman also argued that it was not reasonable to give up the agreed interest and prematurely terminate savings accounts. Kim said, “It is not a reasonable choice to give up the agreed interest and tax exemptions and bear the losses by prematurely terminating accounts out of fear,” and added, “If customers are lured by false information and withdraw their deposits, they can force even perfectly normal cooperatives into trouble as well as suffer losses in property themselves.”

Lastly, he said, “Yesterday, the government formed a government-wide response team composed of the interior ministry, the finance ministry, the Financial Services Commission, the Financial Supervisory Service and the Bank of Korea and announced that we would respond as one team,” and explained, “This means that the government will be responsible and take every measure necessary, including providing funds to MG, to protect the valuable property of MG customers.”