The main equity market/exchange is the Korea Exchange (KRX) (www.krx.co.kr). The KRX was created in 2005 with the merger of the three existing exchanges (the Korea Stock Exchange (established in 1956), the KOSDAQ (established in 1996) and the Korea Futures Exchange). The KRX operates two equity trading markets, which are the:

As of 1 July 2012, 17 foreign companies were listed on the KRX.

In 2011, the total amount of equity raised from IPOs on the KRX was US$3.562 billion, with 73 companies newly listed on the KRX (as at 1 December 2012, US$1 was about EUR0.8). The largest IPOs have been from:

Some companies have postponed their IPOs for various reasons, such as adverse market conditions. However, there is no formal data on the exact number of IPOs that were postponed in 2011.

The KRX is responsible for the review of listing applications and regulates all matters related to listing, including market disclosures and de-listings. The KRX adopts regulations and rules applicable to listed companies.

The Financial Services Commission of the Republic of Korea (FSC) and the Financial Supervisory Services of Korea (FSS) are responsible for all matters regarding the equity markets, including public offerings and all market regulations related to public offerings.

The main piece of legislation applicable to the equity markets is the Financial Investment Services and Capital Market Act of Korea (Act No. 8635 of 2007, as amended) (FSCMA). The FSCMA also provides for the establishment and business of the KRX. The KRX has its own regulations and rules regarding the listing, market disclosures, its operations and related matters.

For primary listing on the main markets/exchanges, the KRX applies both quantitative and qualitative criteria. The qualitative requirements apply to both KOSPI and KOSDAQ and include:

The quantitative requirements vary depending on the relevant equity trading market. Some of the general requirements include:

KOSPI market. At least one of the following three requirements must be fulfilled:

KOSDAQ market. At least one of the following three requirements must be fulfilled:

In any case, a KOSDAQ applicant cannot have its capital impaired for the recent year.

The minimum equity capital amounts or market capitalisations for listing are:

Foreign applicants may choose to apply the market capitalisation requirement in lieu of the equity capital requirement.

For either of the KOSPI market or the KOSDAQ market, the company must have been established and operating for at least three years.

KOSPI market. An applicant must have an auditor's unqualified opinion for the latest fiscal year and an unqualified or qualified opinion for the two years before that time. Any qualified opinion resulting from limitation on the scope of audit, however, is not deemed to meet the listing requirement.

KOSDAQ market. For a listing on the KOSDAQ market, an unqualified auditors' opinion is required for the latest fiscal year only.

For both markets, auditors must use the International Financial Reporting Standards (IFRS) or US Generally Accepted Accounting Practices (GAAP).

KOSPI market. There must be at least 1,000 minority shareholders in total and one of the following conditions must be met:

If an applicant is already listed on a foreign exchange, it is exempted from the above distribution ratio requirement (including the minority shareholding percentage of 25% or higher), provided that at least 1,000 minority shareholders acquire shares in the Korean offering.

For companies making IPOs in Korea and another foreign jurisdiction simultaneously, at least 10% of the total shares offered (the 10% must also be at least one million shares) must be offered in Korea.

KOSDAQ market. There must be at least 500 minority shareholders in total and one of the following conditions must be met:

A market applicant already listed on a foreign exchange is exempted from the above distribution ratio requirement (including the minority shareholding percentage of 25% or higher), provided that at least 500 minority shareholders acquire shares in the Korean offering.

For a foreign company already listed on a foreign exchange, one of the following conditions must be satisfied:

For companies making IPOs in Korea and another foreign jurisdiction simultaneously, at least 20% of the total shares offered (the 20% must also be at least 300,000 shares) must be offered in Korea.

Most IPOs are structured as public offerings of new shares. However, a limited number of IPOs are structured as secondary offerings of existing shares by large shareholders (with or without a combination of offerings of new shares). Since Samsung Card's IPO in 2007, large Korean IPOs are often made both inside and outside Korea. International equity offerings are made in the form of either a Regulation S offering or Rule 144A placement (that is, US Securities Exchange Commission rules and procedures that provide safe harbours for certain offers of securities, including those made outside the US).

Subsequent equity transactions by a listed company are usually made as issuances of new shares, which are categorised as either:

Any issuance of new shares must be approved by the board of the issuer. Due to the existence of pre-emptive rights of existing shareholders, a general public offering of new shares is not common for a listed Korean company. A third-party allotment is permitted only to the extent provided for in the articles of incorporation of the issuer and the Commercial Code.

Under the FSC's regulations, the issue price of a new share to be issued by a listed company must be either:

There is no restriction on the issue price on a rights offering to existing shareholders.

A secondary offering of existing shares by a large shareholder as a subsequent equity offering is also permitted. However, a block trade on the market is commonly used for a block deal of existing shares in Korea, often being followed by a distribution to a number of foreign investors.

The main steps in applying for a listing on the KRX are:

Additional steps are required for the listing of a foreign applicant, including:

The KRX (and the Korea Securities Depository) should be consulted for the most efficient procedures and advice.

The choice of securities to be offered is subject to the law of the jurisdiction where the foreign applicant is established. Given the depositary systems in Korea and the relevant foreign jurisdiction(s) of the offered shares, a foreign applicant can only offer ordinary shares directly in Korea if the law under which the foreign applicant is established recognises each Korean retail investor as legal shareholder of the shares held. Therefore, foreign applicants from certain jurisdictions, such as Japan, Singapore, Australia, the UK and some states of the US, offer Korean depositary receipts, while those from China (or special purpose companies (SPCs) whose main businesses are in China) offer ordinary shares.

Major advisers for an IPO are as follows:

The key documents for a listing on the KRX include the listing eligibility review application and its attached documents. The key documents for an IPO include the:

For a foreign applicant's listing of depositary receipts, a deposit agreement executed between the applicant and the Korea Securities Depository is also required.

The working teams and documentation requirements for an equity offering are simpler than those for an IPO. No listing sponsor is required, and no listing eligibility review application is required. The key documents for an equity offering have are still the securities registration statement, prospectus, and underwriting agreements.

For an offering as defined in the FSCMA, a securities registration statement and a prospectus must be filed with the FSC, and a prospectus must be ready for the review of potential investors, before the start of the solicitation of the offered securities.

An offering is defined, with certain exceptions, as a solicitation to 50 or more investors for the purchase of certain securities. An IPO is generally classed as an offering under the FSCMA. In addition, certain transactions that involve fewer than 50 investors are deemed to be an offering under the FSC regulations. For example, any issuance of new shares by a listed company which is offered to less than 50 investors is an offering if the shares are not deposited with the Korea Securities Depository for one year.

The securities registration statement and the prospectus must be prepared in the Korean language.

The following transactions are not deemed to be an offering, and are therefore exempt from the prospectus requirement (see Question 8):

For the purpose of calculating the number of persons solicited, the following are not included:

A securities registration statement and a prospectus must include material information to allow potential investors to make informed decisions. This must include:

Financial statements must be prepared in accordance with IFRS or (for non-Korean companies) GAAP (see Question 3, Trading records and accounts).

The securities registration statement and prospectus are prepared by the issuer with the assistance of the lead manager and other advisers such as legal advisers and accountants (see Question 7, Main advisers).

The FSC may review filed securities registration statements. If it finds any untrue statements or omission of material information, the FSC can request the issuer to amend the securities registration statement.

Where there is any untrue statement or omission of material information in a securities registration statement or prospectus, the following persons are liable for it:

An expert such as an accountant or a lawyer is subject to civil liability for contents that he consented to or signed for, and may also be subject to criminal liability if the incorrect contents have been wilfully made.

Marketing to domestic investors is conducted through investor relation (IR) events and bookbuilding (see Question 14). IR events are hosted intensively for approximately one week before the bookbuilding is conducted. An IR event may be an individual IR briefing, a smaller IR event or a larger IR event, in accordance with the number of potential investors.

Marketing activities targeting international investors are often conducted in larger-sized IPOs. International marketing is conducted through roadshows (that is, marketing presentations to a limited number of professional investors by the issuer's senior management with the assistance of the lead manager) and bookbuilding.

The following offences are subject to a maximum of five years' imprisonment or a maximum KRW2 billion penalty (FSCMA):

The FSC has published various regulations regarding research reports. A violation of FSC regulations results in sanctions from the Korean regulatory bodies. Sanctions range from the cancellation of the financial investment business in Korea to a simple warning to the involved officer or employee, depending on the seriousness of the violation. Under the regulations:

However, a research analyst can consult with the corporate finance department where necessary to verify the correctness of the information contained in its research report. Any matter directly related to the valuation of the securities, including the change in the investment ratings or target price of the shares cannot be discussed. Consultation is subject to the following rules:

If a Korean securities company provides a third party (excluding any person involved in the preparation of the research report, such as the securities company's affiliates, directors, officers or employees of the affiliates (Affiliates)) with a research report or its material contents before publication to the general public, the early release of the report must be disclosed to the general public, including the time when the research report was released to the third party. This disclosure must be made at the time of the publication of the report.

The Korean securities company must request any Affiliates who were involved in the preparation of the research report not to be involved in a sales transaction for their own account, concerning the securities which are the subject of the research report. This prohibition lasts from when it is confirmed that the material contents of the research report have been finalised and will not be amended, until 24 hours after the report is published. If an Affiliate declines the request for a prohibition on dealing, then the Korean securities company must take measures to exclude the Affiliate from the preparation of the report.

Korean securities companies must disclose the name of the analyst who prepared the research report, the research analyst's financial interests and the source of any data quoted from an outside source.

Where a Korean securities company publishes a research report prepared by a person who is not its director, officer or employee, the name of that person (or where it is a corporation, the name of the corporation) must be stated in the research report.

Bookbuilding is used in almost all public offerings of equity securities, and conducted at the same time as IR events and roadshows (see Question 12). The lead manager presents a price band for the offered shares and identifies demand profiles (including prices and quantities). Bookbuilding is conducted on the shares to be allocated to institutional investors, excluding those allocated to retail subscribers. The lead manager and the issuer review the results of the bookbuilding activities and determine the final offer price.

After the final offer price is agreed, orders from institutional investors and retail investors are placed during the subscription period. To prevent default in subscription, the lead manager and underwriters tend to receive a subscription deposit at a certain rate, which is determined in their discretion according to market conditions, the number of shares to be offered, and so on. The subscription deposit must be reserved in a separate bank account until closing.

At the end of the subscription period, the lead manager aggregates subscription orders and allocates offered shares in accordance with its allotment criteria.

Equity offerings in Korea are typically conducted by full underwriting agreement, under which the underwriters agree to purchase all offered shares, even if not all of the shares are sold to investors. In practice, the subscribed shares are issued and transferred directly from the issuer to the investor, and the underwriters only acquire the shares which have not been subscribed by investors.

The key terms of the underwriting agreement include the:

For an IPO on the KRX with an international tranche, a supplemental underwriting agreement covering the international tranche is executed, while the Korean underwriting agreement covers both the Korean and international tranche. The major clauses of the supplemental underwriting agreement and the Korean underwriting agreement are similar, but some typical clauses customary in a Rule 144A or Regulation S underwriting agreement, such as typical representations and warranties and indemnification clauses, are added in the two agreements (see Question 4).

Underwriting fees vary, but typically range from 1.5% to 3% of the aggregate offer price. The underwriting fee in an IPO by a foreign issuer usually ranges from 3% to 8% of the aggregate offer price, due to the special aspects of the transaction.

Please note that the periods and numbers of days set forth below are only for illustrative purposes, and do not include the exact requirements under the applicable laws and regulations.

A typical timetable for an equity offering is as follows:

An IPO requires certain procedures for the listing, and the typical timetable for an IPO is as follows:

For an IPO by a foreign issuer, several additional months (subject to the laws of the applicable jurisdictions) may be necessary for restructuring of the issuer's corporate structure and amending constitutional documents, if required.

In principle, price stabilisation or pegging is generally prohibited by the FSCMA. However, some forms of price stabilisation or market-making are permitted.

A Korean securities company that has disclosed its plan for stabilisation and/or market making in the relevant securities registration statement (or, if there is no securities registration statement, the underwriting agreement) (Permitted Securities Company) must disclose its plan in the prospectus of the subject securities. Immediately after the first market-making activity, the Permitted Securities Company must file a market-making report with the FSC and the KRX.

The period for the market-making is 20 days ending on the last date for subscription of the subject securities. However, if the offer price is determined during that 20-day period, the market-making period must start on the day after the price is determined.

The purchase price paid by the Permitted Securities Company must not exceed the price to be calculated by one of the formulas prescribed by presidential decree of the FSCMA.

A Permitted Securities Company may conduct stabilisation for six months starting on the listing date of the subject securities by:

The Permitted Securities Company must not:

Generally, capital gains earned by a Korean company or individual arising from the transfer of equity securities are subject to capital gains tax in Korea. A Korean company is taxed on capital gains at the normal corporate income tax rate. The rate of capital gains tax for a Korean individual is usually 11% (including local income surtax) to 33% (including local income surtax). However, capital gains earned by a Korean individual through the KRX are not subject to capital gains tax unless the individual is a major shareholder under the Individual Income Tax Law (the definition of major shareholder under the Individual Income Tax Law may be different from that under other Korea laws).

Capital gains earned by a non-resident individual or non-Korean corporation (non-resident) who transfers equity securities in a Korean company may be subject to Korean withholding tax at the lower of 11% (including local income surtax) of sales proceeds or 22% (including local income surtax) of capital gains, unless exempt under an applicable double taxation treaty. A non-resident is not subject to Korean income tax on capital gains realised on the sale of equity securities through the KRX if the non-resident has owned, together with certain related parties, less than 25% of the total issued equity securities at any time during the year of sale and the five calendar years before the year of sale.

In addition, securities transaction tax on the transfer of equity securities is imposed at the rate of:

There are three types of disclosure obligations:

Periodic disclosure. Periodic disclosure applies to investors business details as well as business results and financial conditions. The following three documents must be submitted to the FSS and the KRX:

Timely disclosure. Timely disclosure is one of the key self-regulatory measures that the KRX instituted to facilitate equal access to information within the securities market on an ongoing basis. Timely disclosures are classified into three categories:

Fair disclosure. Under the fair disclosure system, a listed company planning to provide institutional investors or other designated persons with important information not yet disclosed on the market must first disclose it so that all market participants receive the same information. Information subject to fair disclosure obligations includes:

Recipients of information triggering fair disclosure obligations include persons who engage in securities business either in or outside of Korea and/or who have easier access to fair disclosure target information than others.

A fair disclosure must be made to the KRX before providing the information to the above recipient(s). However, where the information was made available due to an accident or minor error, this must be disclosed on the day of the accident or error.

A listed company is prohibited from conducting certain credit-providing activities to or for a major shareholder (that is, a person who holds 10% or more of the shares or practically exercises management control over the company), a director (including persons practically exercising the role of a director), an executive officer or a statutory auditor of the company (Commercial Code). These activities are:

However, a credit-providing activity is permitted if:

A listed company whose total assets are KRW2 trillion or more must obtain the board's approval and report at the first shareholders' meeting after the board approval where either (with certain exceptions):

The continuing obligations also apply to listed foreign companies, whether they have listed ordinary shares or depositary receipts, except for the fair disclosure obligations which do not apply (see Question 19). If a foreign company is listed on an exchange other than the KRX, any disclosure to the other exchange must be disclosed on the KRX at the same time.

In principle, disclosure on the KRX should be in the Korean language, but periodic disclosure reports of a foreign company may be disclosed in their original language together with Korean-language summaries.

A listed foreign company must nominate a disclosure agent in Korea. The lead manager for the IPO should be the disclosure agent of the company for the first two years after the listing.

Failure to file a periodic report or a certain timely disclosure may subject the offending party to a maximum of one year's imprisonment or a maximum KRW30 million penalty. An untrue statement or omission of material information in a periodic report or a timely disclosure may subject the offending party to up to five years' imprisonment or a maximum of KRW200 million penalty. Administrative sanctions may also apply, including fines and/or civil damages indemnification imposed by the FSC.

In addition, a violation of the timely disclosure or the fair disclosure obligations may subject the violating company to:

To de-list, the listed company should file an application for de-listing after obtaining the shareholders' approval. The listing committee of the KRX may reject the application after a review. In reviewing the application for de-listing, the KRX must consider the interests of the investors by checking whether:

In 2011, one foreign company voluntarily de-listed from the KRX.

The KRX may designate shares of certain listed companies as securities under administration or securities requiring caution and de-list shares, in accordance with the provisions of the KRX listing regulations and rules. Based on recent de-listing cases, the major causes for de-listing include:

Other causes for a compulsory de-listing are:

In the year ending 30 June 2012, 47 listed companies were compulsorily de-listed from the KRX (six from the KOSPI market and 41 from the KOSDAQ market).

Traditionally, most debt securities transactions have been carried out outside the markets regulated by the securities exchanges.

Other than transactions made in the over-the-counter market, the KRX is the main exchange for debt securities (see Question 1).

As of 30 June 2012, 9,963 debt securities are listed on the KRX, and the listed outstanding amount is KRW1,250 trillion.

The total amount of Korean corporate bonds issued in 2011 was KRW98.1 trillion, which was an increase from KRW81.0 trillion in 2010 (Source: Bell Insight – 2011 Korea Capital Markets League Table Magazine). The amount of Korean debt securities offered outside Korea by Korean issuers was US$21.4 billion in 2011, which was an increase from US$17.5 billion in 2010.

The KRX is responsible for the review of listing applications and the regulation of all matters related to listing, including market disclosures and de-listings. The KRX adopts regulations and rules applicable to listed securities.

The FSC and the FSS are responsible for all matters regarding the debt markets, including public offerings and all market regulations related to public offerings.

The legislation applicable to the debt securities markets is the FSCMA, which also provides for the establishment and business of the KRX. The KRX has its own regulations and rules on listing, disclosures and matters related to debt securities.

The debt securities listed on the KRX are generally issued through a public offering. When securities are issued to professional investors, a public offering is an alternative, but issuers usually carry out a private placement. An issuance of corporate bonds must be approved by the board of the issuer.

For publicly offered debt securities, the issuer must file a securities registration statement in advance of the issue. The FSCMA provides for shelf registration, but it is not yet broadly used by corporate bond issuers, while stock price linked securities are commonly issued through shelf registration.

Government bonds, municipal bonds and special corporation bonds (which are issued by a corporation established by a special law) (see Question 27) are listed on the KRX without a listing eligibility review by the KRX and do not necessarily need to satisfy any listing requirements.

The requirements listed below apply only to specific laws bonds for which the filing of a securities registration statement is required.

Domestic debt securities. For a domestic issuer, convertible bonds must be issued in book-entry form under the Bond Registration Act.

Foreign debt securities. For debt securities issued by a foreign issuer (except for certain international financial institutions) the issuer must be:

In addition, a credit rating of BBB+ or higher is required.

For a foreign issuer, all bonds must be issued in book-entry form under the Bond Registration Act.

Domestic debt securities. A Korean issuer must be a company with capital stock of at least KRW500 million. (This requirement does not apply to secured bonds, mortgage bonds and asset-backed securities.)

The outstanding principal amount of the bonds issued by a domestic issuer must be KRW300 million or more. In the case of secured bonds or mortgage bonds, it must be KRW50 million or more.

Foreign debt securities. For a foreign issuer, the shareholders' equity of the issuer must be at least KRW10 billion and the capital must not have been impaired. The rules on the size of the bond issue are the same as for a Korean issuer (see above).

There is no requirement for trading records or accounts.

There is no minimum denomination requirement, except for convertible bonds, where the denomination must be KRW100,000.

The FSCMA classifies debt securities mainly in accordance with the types of issuers as follows:

About half of the issued bonds are special corporation bonds, and about one-third are government bonds.

The Commercial Code and other applicable laws provide, in addition to straight bonds, for special types of bonds with additional features as follows:

Recent amendments to the Commercial Code, effective from April 2012, permit Korean companies to issue debt securities with various options which are not explicitly mentioned in the law.

An issuance of bonds to be offered to the public requires the filing of a registration statement (see Questions 30 to 34).

Special corporation bonds issued by national banks are sold in private sales. Treasury bonds and monetary stabilisation bonds are sold through bidding procedures to publicly-solicited participants. Most corporate bonds are underwritten, while other bonds with low liquidity are sold in private placements.

Bonds issued in Korea may be registered with the Korea Securities Depository or Korean banks after filing an application with the FSC. This bond registration system is similar to a trust structure. However, many bonds are not yet registered and paper certificates are held by bondholders of such bonds.

The major advisers are as follows:

The key documents for an issuance of debt securities include the:

If the debt securities are publicly offered, a securities registration statement and prospectus must be prepared and filed with the FSC.

The prospectus requirements are the same as for an issue of equity securities (that is a prospectus is required for an offering, which is usually where securities are offered to 50 or more persons) (see Question 8).

Certain transactions not involving 50 or more investors are deemed to be an offering under the FSC regulations. For example:

An offering of government bonds, municipal bonds or certain special laws bonds is exempt from the securities registration statements and the prospectus obligations.

The following transactions are not deemed to be an offering, and are therefore exempt from the prospectus requirement (see Question 9):

The main content of a securities registration statement and a prospectus are substantially the same as for an equity offering (see Question 10).

A securities registration statement and a prospectus are prepared by the issuer with the assistance of the lead manager and other advisers. Liability is allocated in the same way as for an equity offering (see Question 11).

A typical timetable for an offering of debt securities is as follows:

The potential tax issues include the following:

Bonds registered with the Korea Securities Depository are electronically cleared and settled through the system of the Korea Securities Depository. Bonds can only be issued after the bond amount, whether it is denominated in Korean won or not, is fully paid.

In general, the currency for Korean debt securities is Korean won, while some are denominated in other currencies, such as US dollars and Japanese yen. As of 30 June 2012, out of 9,963 debt securities listed on the KRX, 135 debt securities were denominated in US dollars, ten were denominated in yen, and the rest were denominated in Korean won. Most Korean debt securities issued outside Korea are denominated in US dollars and yen, but some are denominated in various currencies such as Swiss francs, Canadian dollars, Chinese yuan, Thai baht, Malaysian ringgit and others.

Foreign exchange authorisation is required in connection with debt securities denominated in foreign currencies and/or issued outside Korea.

Continuing obligations of the issuer of the debt securities listed on the KRX are generally designed to ensure that:

An issuer must file a report with the KRX when there is a change in any of the major terms of the debt securities, including:

Periodic disclosure. The issuer must submit annual and semi-annual reports to the KRX.

Timely disclosure. The issuer must disclose the following events:

The KRX can make a request for an inquired disclosure of any of the above material information and the issuer must comply with this request within half a day.

A foreign issuer of debt securities listed on the KRX must file a report with the FSS and the KRX when any of the following events occur:

The same obligations for periodic and timely disclosures applicable to Korean issuers of debt securities listed on the KRX also apply to foreign issuers (see Question 37).

The penalties for breach of a continuing obligation are the same as for an equity offering (see Question 21).

On 25 June 2012, the government proposed a Bill to amend the FSCMA (FSCMA Amendment Bill) for the approval of the National Assembly of Korea. It is expected that the National Assembly will review the Bill in the second half of 2012, but it is not clear whether it will be approved, and, if approved, whether any revisions will be made.

Major provisions in the FSCMA Amendment Bill relating to the equity and debt capital markets include:

According to the FSCMA Amendment Bill, a licensing system for securities exchanges will be introduced, and alternative exchanges other than the KRX may be established. On the FSC's approval, a company which carries out multilateral trades of listed shares through electronic media may be established.

On 16 April 2012, the FSC announced its plan for establishing a stock exchange exclusively for SMEs, tentatively named Korea New Exchange (KONEX), to facilitate direct financing of venture start-ups and SMEs through the equity market. KONEX will set minimum requirements for listing and de-listing. Disclosure requirements will be eased for KONEX-listed SMEs to reduce the costs of maintaining the listing. KONEX will adopt various auction schemes to enhance the price-discovery function of the market, after the first stage where a single price auction scheme will be adopted to attract more quotes. KONEX will designate qualified securities companies as advisers to assist SMEs' listing.

On 27 June 2012, the FSC and the KRX announced that they will introduce a rule making it mandatory to file a report on short positions, effective from 30 August 2012. The rule enables regulators to have better access to data on short selling activities in the equity market. According to the draft rule, an investor who has an open short position resulting from short sales that amounts to, or exceeds, the threshold of 0.01% of the issued share capital of a listed company at the end of each trading day must report the short position to the FSC and the KRX within three business days from the day that the short position reaches the threshold.

If the daily short positions continue to amount to or exceed the 0.01% threshold, the investor must report each day. These reporting obligations only apply to short positions resulting from trading shares listed on the KRX. Short positions created through trading of other securities or derivatives are excluded for reporting purposes.

On 21 June 2012, the FSC announced a Covered Bond Act Bill which it will submit to the National Assembly for its approval by November 2012. If the Bill is passed, Korean covered bonds would help banks reduce their funding costs, and enhance the soundness of household debt by encouraging banks to extend more long-term and fixed-rate loans.