Eun Seong-su, the 'Financial Firefighter' for One Year, Faces COVID as Next Year's Key Issue

One Year Filled with COVID-19 Financial Support
Increased 'Financial Quarantine' Burden Amid 3rd Wave
Immediate Challenges Including Loan Maturity Extensions

Eun Sung-soo, Chairman of the Financial Services Commission

[Asia Economy Reporter Kim Hyo-jin] "Policy financial institutions will supply funds at the maximum level they can endure in the short term." (February 24, 2020 briefing)

"When a fire breaks out, the top priority should be rescuing lives and extinguishing the fire rather than conserving firefighting water." (September 8, 2020, 'Reflections on One Year in Office')

"Next year, I think the first topic will again be overcoming the novel coronavirus infection (COVID-19) crisis." (December 14, 2020 year-end meeting)

The past year of Eun Sung-soo, Chairman of the Financial Services Commission who oversees domestic financial policy, has been marked by COVID-19, as reflected in his remarks. He began this year under the banner of a 'financial paradigm shift' to channel more funds into productive sectors such as small and medium-sized enterprises (SMEs) and venture companies, but less than a month later, the 'Wuhan pneumonia' situation escalated into the COVID-19 pandemic, and the direction of financial policy was instantly adjusted to 'full support for COVID-19.'

As the COVID-19 situation, which seemed to be under control, spread into a third wave surpassing the first and second waves, and the possibility of implementing the highest-level social distancing measures that could partially paralyze the economy's lifelines was seriously discussed, there is a growing view that Chairman Eun's role and burden as the 'financial firefighter' will inevitably increase.

One of Chairman Eun's immediate tasks is managing the extension of loan maturities and the deferral of interest repayments for SMEs and small business owners affected by COVID-19.

At the Financial Services Commission's year-end online press briefing on the 14th of this month, he expressed concern by saying, "A soft landing plan that allows (small business owners, etc.) time to adapt is necessary." His remarks are interpreted as suggesting the possibility of extending these measures. His policy is to gather opinions from the financial sector, industry, and experts starting next month to prepare a plan.

From the perspective of financial institutions, loan maturity extensions and interest repayment deferrals represent potential non-performing loans. Approximately 115.4 trillion won in loan maturity extensions have been made from February to the 4th of this month. Including the extension of guarantees by policy financial institutions, the total approaches 150 trillion won.

Regarding concerns that measures such as maturity extensions could lead to financial insolvency, Chairman Eun said, "It is a reasonable concern," but added, "We are making every effort to strengthen our capacity to proactively absorb such risks through provisions for loan losses and other means."

"Balancing conflicting goals is not easy"

Regarding government real estate measures and related loan regulations, Chairman Eun expressed his difficulties by saying, "It is a challenging task to simultaneously pursue three goals: COVID-19 financial support, household loan stability, and enabling ordinary citizens to own homes." Balancing these conflicting goals is not easy.

He explained, "We will devise wisdom to achieve these goals simultaneously," adding, "When we create an advanced household debt management plan in the first quarter of next year, we will include such considerations."

On the private equity fund scandals such as Lime and Optimus, he stated, "We deeply regret that many investors suffered damages due to the insolvency of some private equity funds." Chairman Eun also said, "We regret not recognizing and supervising the fund insolvency earlier," and emphasized, "We plan to make every necessary effort to ensure there is no negligence in investor protection going forward."

Regarding the comprehensive investigation of private equity fund management companies initiated by the Lime scandal, he predicted, "As of the 4th, about 40% of the inspections have been completed, and they will be finished by the first quarter of next year," adding, "I have heard that there are no major problems with the funds, and the Financial Supervisory Service will take necessary procedures against some management companies found to be deficient in the inspection results."

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