Park Jaesik Marks 2 Years in Office: "Savings Banks to Launch Full-Scale Deregulation Efforts This Year"

Research Service for Deregulation, Listening to Field Difficulties
Establishing Key Business Plans and Persuading Financial Authorities

Jae-sik Park, President of the Korea Federation of Savings Banks

[Asia Economy Reporter Minyoung Kim] The savings bank industry is launching an all-out effort for deregulation this year. The Korea Federation of Savings Banks, representing 79 savings banks, plans to actively persuade financial authorities to ensure thorough improvements in laws and regulations.

According to the Korea Federation of Savings Banks' '2020 Key Business Plan' on the 10th, the federation has set deregulation as its top priority this year and plans to actively request amendments to the Savings Banks Act and supervisory regulations from financial authorities.

The federation already conducted research projects last year to review various regulations and listened to on-site difficulties.

The industry views this as the right time to achieve deregulation. This is because Park Jae-sik, president of the Korea Federation of Savings Banks, who took office on January 21 last year and is now in his second year, can actively communicate with the Financial Services Commission and others. Both inside and outside the federation expect that deregulation efforts led by President Park, a former government official (passed the 26th Administrative Examination), will gain momentum this year. It is also reported that President Park's determination is considerable.

In his New Year's address, President Park stated, "We will comprehensively review regulations on savings banks, propose to financial authorities to improve regulations that are unfair or unreasonable, and establish an institutional foundation for sustainable growth."

He cited differentiated supervision by the size of savings banks as the top priority. Currently, the industry applies the same regulations to both large companies with assets exceeding 8 trillion won and small companies with assets around 24 billion won. The opinion is to divide large and medium-small companies according to asset size and ease unnecessary regulations on smaller companies.

Deregulation of business area restrictions is also a long-standing wish of the industry. The industry is divided into six regions: Seoul, Gyeonggi-Incheon, Gangwon-Chungcheong, Gwangju-Jeolla, Daegu-Gyeongbuk, and Busan-Ulsan-Gyeongnam, and savings banks are prohibited from operating in other regions. However, since the 2011 savings bank insolvency crisis and the subsequent consolidation process, some savings banks operate in up to five regions, making the regulation effectively obsolete, according to the industry.

The joint liability regulation excessively imposed only on savings bank executives is also a target for relaxation. Savings bank executives are jointly liable for debts if they cause damage to the savings bank or others intentionally or negligently, whereas executives in other financial sectors such as banks, insurance companies, and securities firms are liable only if they commit intentional or 'serious' negligence. The industry claims that this regulation discourages talented financial professionals from becoming savings bank executives. The prohibition on mergers and acquisitions (M&A) among savings banks is also considered an 'outdated regulation.'

The first test will likely be the meeting scheduled for the 16th with Eun Sung-soo, chairman of the Financial Services Commission. An industry official said, "Although this is the first meeting between Chairman Eun and industry representatives and serves as an 'introductory meeting,' such opportunities are rare, so it will be a time to frankly convey requests."

This content was produced with the assistance of AI translation services.