Regulation Easing Leader Jae-sik Park... "Improving Unreasonableness" (Comprehensive)

Industry, Timely Deregulation This Year
Authorities Must Maintain Continuous Communication with Political Circles

[Asia Economy Reporter Kim Min-young] 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 last year to review various regulations and collected on-site difficulties.

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

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 (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 and propose to financial authorities to improve any unfair or unreasonable regulations to establish an institutional foundation for sustainable growth."

He identified differentiated supervision based on the size of savings banks as the top priority. Currently, the industry applies the same regulations to both large institutions with assets exceeding 8 trillion won and small firms with assets around 24 billion won. There is an opinion that large, medium, and small institutions should be separated according to asset size and unnecessary regulations on smaller firms should be eased.

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 banks are prohibited from operating outside their designated regions. However, since the 2011 savings bank insolvency crisis and subsequent consolidation process, some savings banks operate in up to five regions, rendering the regulation practically ineffective, 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 bank or others through intentional or negligent acts, whereas executives in banks, insurance companies, and securities firms are liable only for 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.'

It is reported that some consensus on deregulation has been reached with financial authorities. However, since direct demands for deregulation to financial authorities and politicians could provoke opposition, the industry is discussing specific measures to expand inclusive finance and protect low-income financial consumers with the authorities.

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 meeting will be a 'first introduction' between Chairman Eun and industry representatives, such opportunities are rare, so it will be a time to frankly convey our proposals."

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