South Korea’s financial regulator said Wednesday it plans to step up the inspection of the country’s major savings banks this year as part of its efforts to restructure the ailing sector.

According to the Financial Services Commission, its executive body, the Financial Supervisory Service, is expected to sign an agreement with the state-run deposit insurer Korea Deposit Insurance Corp. to conduct annual inspections of savings banks with assets over 2 trillion won ($1.7 billion) or those who have affiliated savings banks.

The FSS and the KDIC had previously conducted joint inspections on a number of selected players. Up to 20 savings banks may face mandatory inspections every year following the revised agreement, according to the FSC.

The move comes amid concerns that a deterioration of big savings banks may send ripples across the local finance industry.

Savings banks account for around 2.8 percent of the domestic finance industry, but a possible deterioration of their heavy project financing loans is feared to hurt the overall industry and upset thousands of depositors.

Last year, the FSC temporarily suspended business operations of 16 savings banks, citing their inadequate capital base. 

(Yonhap News)