Regulators urge financial groups to assume greater social responsibility

The Korea Times

The Korea Times

Finance

Wed, December 6, 2023 | 09:46

Economy

Regulators urge financial groups to assume greater social responsibility

Posted : 2023-11-20 16:43

Updated : 2023-11-21 16:42

Financial Services Commission (FSC) Chairman Kim Joo-hyun, center, and Financial Supervisory Service (FSS) Governor Lee Bok-hyun, fifth from left, stand next to leaders of domestic financial groups in Seoul, Monday. From left, DGB Financial Group Chairman Kim Tae-o, KB Financial Group Chairman Yang Jong-hee, Hana Financial Group Chairman Ham Young-joo, Woori Financial Group Chairman Yim Jong-yong, the FSS governor, the FSC chairman, NongHyup Financial Group Chairman Lee Suk-joon, Shinhan Financial Group Chairman Jin Ok-dong, BNK Financial Group Chairman Bin Dae-in, JB Financial Group Chairman Kim Ki-hong and Korea Federation of Banks (KFB) executive Lee Tae-hoon. Yonhap

8 holding companies plan to lower interest burden

By Anna J. Park

Heads of financial authorities have once again called on domestic financial groups to take on greater social responsibility, pressuring the companies to lower the burden on small and medium-sized business owners stemming from soaring interest rates.

During a meeting on Monday afternoon in Seoul with leaders of eight financial groups — NongHyup, Shinhan, Woori, Hana, KB, BNK, JB and DGB — Financial Services Commission (FSC) Chairman Kim Joo-hyun stressed that the financial sector needs to assume a bigger role in buttressing the economy's soundness by keeping interest costs in check.

"The financial sector's record-high increase in interest profit translates into an all-time-high burden on the part of the public. Accordingly, there's a critical stance among the public that the substantial profits of banks are resulting merely from external factors. Despite the financial group's efforts to promote environmental, social and corporate governance (ESG) management and social contributions, a lingering negative perception towards the financial industry has led the National Assembly to propose a so-called windfall tax bill," Kim said during the meeting.

Highlighting the situation faced by the self-employed and small business owners, the chief of the top financial regulator emphasized that the financial groups should draw up "tangible measures that can directly and perceptibly reduce the level of interest burden" that has increased since the end of the COVID-19 pandemic.

Despite sluggish economic conditions, the banking industry's annual net profits have risen steadily over the past three years amid globally soaring interest rates, from 11.5 trillion won ($8.9 billion) in 2020 to 13.9 trillion won in 2021 and 17.7 trillion won in 2022.

The chief of the FSC also asked the financial groups to pay extra attention to internal controls as well as transparent and fair governance in order to achieve a material improvement in their management system.

Financial Supervisory Service (FSS) Governor Lee Bok-hyun reiterated the FSC chairman's call to the financial groups to step up internal control efforts to prevent financial accidents.

"The public's trust in the financial sector has deteriorated significantly over the past few years, due to a series of major financial incidents that have wreaked havoc on consumers. The FSS earnestly requests the financial groups to improve internal controls under the leadership of their CEOs to prevent major and repetitive financial incidents and consumer harm," Lee said during the meeting.

In response, the eight financial holding companies pledged to actively review ways to reduce the interest burden on the self-employed and small business owners, aiming to assume a greater social responsibility. The financial groups plan to draw up and announce specific measures by the end of this year.

Attendees at Monday's meetings included NongHyup Financial Group Chairman Lee Suk-joon, Shinhan Financial Group Chairman Jin Ok-dong, Woori Financial Group Chairman Yim Jong-yong, Hana Financial Group Chairman Ham Young-joo, KB Financial Group Vice Chairman Yang Jong-hee, BNK Financial Group Chairman Bin Dae-in, JB Financial Group Chairman Kim Ki-hong and DGB Financial Group Chairman Kim Tae-o.

annajpark@koreatimes.co.kr