South Korea financial watchdog cautions on heated competition

The FSS advised South Korean banks to step up overseas expansion as local market is already saturated.

South Korea's financial watchdog said intensifying competition among local banks to increase their size could threaten asset quality and profitability amid the country's changing financial landscape.

The Financial Supervisory Service pledged to strengthen its monitoring as the financial sector sees stiffer competition such as from credit card firms.

South Korean banks are also bracing for stiffer competition after Hana Financial Group agreed to a $4.1 billion takeover of its local peer Korea Exchange Bank.

"When the authorities stand up, it can stop heated competition," Kwon Hyouk-se, newly-appointed governor of the FSS, told a news conference on Thursday.

During its ongoing inspection into Kookmin Bank, the country's top mortgage lender, regulators said they planned to look into any potential risk that excessive competition in lending may cause.

The FSS added that it would help South Korean banks looking for opportunities to expand overseas from the already saturated local market.

View the full story in Reuters.