Banks Unable to Even Consider M&A or New Ventures... "Focusing Entirely on Risk Management in the Second Half" (Comprehensive)

Significant Reduction in Second Half Management Strategy Meeting
Focus on Risk Management and Digital Innovation
Risk Management More Urgent Than New Business Preparation

[Asia Economy Reporters Kim Hyojin, Kim Minyoung] "Risk and soundness management is more urgent than mergers and acquisitions (M&A) or discovering new business opportunities. The burden from the rapidly loosened loans and maturity extensions due to COVID-19 has become too great. We can't even think about formulating a second-half strategy like in previous years." (Executive in charge of strategy at Bank A)

Major commercial banks have become very cautious ahead of formulating their management strategies for the second half of this year. Due to the impact of COVID-19, the management strategy meetings, which were usually prepared with grand ceremonies every year, have been significantly scaled down this year.

Rather than drawing up aggressive new business blueprints, banks are focusing on preparing defense measures against accumulated risks such as 'COVID loans.'

According to the banking sector on the 3rd, Shinhan Bank plans to replace the second-half management strategy meeting with a non-face-to-face video conference at its headquarters on the 17th. On-site attendance will be minimized to department heads and some executives at the headquarters. Shinhan Bank usually held management strategy meetings at the Gyeonggi Giheung training center with around 1,000 employees attending.

Woori Bank will also hold its management strategy meeting on the same day in the headquarters auditorium. Unlike previous years when it was held at large venues such as KINTEX in Goyang, Gyeonggi Province, this year it has been greatly scaled down. It is known that the number of attendees in the auditorium will be limited for COVID-19 prevention.

Hana Bank also plans to hold management strategy meetings with only a minimal number of people gathered by sales groups without any separate events. Depending on the spread of COVID-19, the meeting may be conducted in a non-face-to-face manner without people gathering on-site.

KB Kookmin Bank replaced the second-half management strategy meeting with a simple 'roll call' style meeting attended by only some executives on the 1st. NH Nonghyup Bank also held a meeting with only sales headquarters department heads on the 26th of last month and moved on.

The primary reason is to prevent the spread of COVID-19, but banks explain that the worsening internal and external management and business conditions have also made it difficult to present bold and proactive strategies like in previous years or earlier this year.

An official from a bank said, "On the surface, various strategies can be proposed, but the biggest issue in the second half is undoubtedly risk management," adding, "Because the public responsibility of COVID-19 financial support must be borne in the second half as well, the focus will be on smooth support and maintaining soundness."

[Image source=Yonhap News]

Another bank official said, "If it were not for COVID-19, we would have worked hard to review and supplement major external business plans and statuses such as global business expansion established last year and earlier this year, but the progress of the business itself has become physically difficult, so the direction is understood to have changed significantly."

The official added, "It is urgent to reorganize the loan portfolio for the second half based on a thorough review of the loan assets accumulated in the first half," and said, "Except for livelihood financial support related to COVID-19, other loan sectors will inevitably shift somewhat conservatively overall."

Meanwhile, banks are focusing on various innovations in management and work environments aligned with the non-face-to-face trend triggered by COVID-19. In the case of Woori Bank, detailed strategies were established based on four major strategies: digital transformation, building a non-face-to-face transaction environment, 'New Normal' management, and proactive risk management.

Other banks are also focusing on internal system innovation centered on non-face-to-face services, customer-centric service restructuring, expanding loss absorption capacity through loan loss provisions, active management of various soundness indicators, and adjusting profitability indicators to respond to ultra-low interest rates.

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