Reins tighten on mutual savings firms

The government held a Cabinet meeting Tuesday led by Prime Minister Lee Han-Dong at the Central Government Complex in Sejong-ro, Seoul. The meeting concluded with an agreement on a revision of the Mutual Savings and Finance Company Law, requiring a change in name from mutual savings and finance companies (MSFCs) to "savings banks" and stressing the inspection of the management.

Should the proposed revision pass the National Assembly, savings banks will have to open 50 percent of their board of director seats to outside advisors. Also, establishment of an inspection committee of each savings bank institution will be made mandatory with two-thirds of the inspection board members made up of outside members.

The revision requires each bank to notify the Financial Supervisory Committee (FSC) when an individual or a company obtains more than 10 percent of its public stocks. Should the bank fail to notify the FSC, the unreported stockholder will not be allowed to exercise his or its voting options for a limited time.

The stockholders of the savings banks will be given 50 percent clout in the affairs of the bank, and a legal action could be brought against any stockholder with more than 0.005 percent of the stocks.

The Cabinet meeting also addressed the growing traffic problem of the cities and called for a special designation of areas in the cities where traffic is heaviest. In such areas, all facilities or construction that adds to heavy traffic will be designated "those which hamper the flow of traffic" and fines levied on such facilities. The Cabinet meeting agreed on a revision of the law on improvement of city traffic condition, which allows such system of control for the traffic condition in the cities.

Moon Chul fullmoon@donga.com