Yet two-thirds of these firms are still likely to fail, according to the Financial Supervisory Commission, South Korea's financial regulator.

ECONOMIST: South Korean bankruptcy: Death, where is thy sting? | The

But he decided to bring in as his deputy someone from his previous office and hired one auditor from the Financial Supervisory Commission.

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The Financial Supervisory Commission, the new banking watchdog, will sort out sick banks from healthy ones by September and may liquidate a couple of merchant banks and stockbrokers.

ECONOMIST: Reform in South Korea