Under All-Round Pressure from the Profit-Sharing System... "The Financial Sector Is Also Tight"

Ruling Party Turns Attention Amid Platform Companies' Backlash

[Asia Economy Reporter Sung Kiho] As the ruling Democratic Party accelerates the implementation of the COVID-19 profit-sharing system, the financial sector is also becoming tense. The ruling party views the banking sector as one of the industries that notably profited during the COVID-19 period. However, there are also disgruntled voices questioning whether the financial industry, which has actively responded to government policies during crises, must once again bear the burden this time.

The ruling party's profit-sharing proposal for the financial sector has rapidly spread following remarks by Hong Ikpyo, the Democratic Party's Policy Committee Chairman. On the 19th, Hong appeared on a radio broadcast and stated, "Even during the COVID-19 situation, the biggest industry making profits is finance, so instead of just reducing rent and stopping there, the interest from banks should also be stopped or limited." He further emphasized the need to consider a temporary special law if necessary, reiterating the 'Interest Suspension Act.'

Initially, the ruling party targeted platform companies such as online shopping and food delivery services, which saw a surge in demand due to COVID-19, as subjects of the profit-sharing system. However, recognizing the limitations of focusing solely on these sectors, the scope has expanded to include the banking sector. On the 15th, during the first meeting of the Post-COVID Inequality Resolution Task Force for in-depth discussions on the profit-sharing system, claims arose questioning whether credit card companies also benefited from fees due to COVID-19 disaster relief funds, sparking further debate.

"We Have Faithfully Followed Policies So Far"... Controversy Over Fairness

The ruling party maintains a firm stance on the profit-sharing system. Party leader Lee Nak-yeon mentioned the 'profit-sharing system' earlier this year, and President Moon Jae-in responded at a press conference on the 18th, saying, "There are winners who have performed well and made money during COVID-19. It is a very good thing for such companies to contribute and create funds."

According to the financial sector, the estimated net income of the four major financial holding companies?KB Financial, Shinhan Financial, Hana Financial, and Woori Financial?was approximately 11 trillion won as of the end of last year. However, during the COVID-19 phase, banks extended loan maturities in line with government policies, with the amount reaching 110 trillion won since last year.

The financial sector is concerned that the repeated regulatory pressures from authorities and politicians may materialize into actual policies. Additionally, there is dissatisfaction that after being forcibly mobilized for the Securities and Bond Market Stabilization Fund, green finance, and New Deal funds following COVID-19, as well as the grace period for principal and interest repayments for self-employed and small businesses, the government's and ruling party's pressure is excessive.

A bank official expressed, "It is difficult to openly oppose government policies," adding, "Especially in the case of the profit-sharing system, there could be issues of breach of fiduciary duty for management, making compliance difficult." Another financial sector official said, "While it is the role of financial companies to support and participate in various policies during crises, recently it has become excessive," expressing concern over the significant risks associated with forced mobilization.

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