"Concerns Over Severe Disciplinary Actions Against Bank Presidents"… Kim Kwang-soo's Advice to Regulatory Authorities

Strong Voice at 100-Day Inauguration Press Conference
Calls for Clearer Disciplinary Regulations

[Asia Economy Reporter Kiho Sung] "There is great concern in the banking sector about the push to discipline bank presidents due to inadequate internal controls. This is far from the 'principle of clarity,' which is the basic stance of the Ministry of Government Legislation and the courts."

The tone was stronger than expected. At a non-face-to-face press conference marking his 100th day in office, Kim Kwang-soo, Chairman of the Korea Federation of Banks, spoke out strongly against the financial supervisory authorities. While the chairman of the Federation of Banks usually represents the banking sector in discussions with financial authorities and ensures that the market's voice is reflected at the Financial Supervisory Service on common industry issues, the unusually high level of criticism was a common assessment in the market.

This can be interpreted as reflecting the significant dissatisfaction and anxiety over the authorities’ unilateral moves to conclude issues such as the Lime Asset Management fund scandal by imposing severe disciplinary actions on bank CEOs whenever financial sector problems are pointed out. While Chairman Kim represented the banks as the head of the Federation, it is also understood that, as a former official of the Financial Services Commission, he publicly expressed his discomfort with the scrutiny.

Recently, the Financial Supervisory Service has been pushing for strong disciplinary measures in connection with the private equity fund scandal. Son Tae-seung, then CEO of Woori Bank and now Chairman of Woori Financial Group, was subjected to a 'suspension of duties' due to the sale of Lime funds, and Jin Ok-dong, CEO of Shinhan Bank, was notified of a severe disciplinary action of a 'reprimand.' A disciplinary review committee is scheduled for the 18th in relation to this.

Chairman Kim pointed out, "There are many cases where CEOs are disciplined as supervisors, but if that happens, the bank president would have to effectively manage and supervise all employee actions, which is unrealistic," adding, "Disciplinary actions and similar measures require clear regulations so that financial companies can have sufficient predictability." In other words, financial companies must be able to anticipate administrative sanctions like disciplinary actions by strictly adhering to regulations and laws.

While the authorities are reportedly taken aback by the Federation of Banks chairman’s public criticism of his former employer, the financial sector feels "relieved that someone has spoken out." A banking official hinted, "The level of remarks made by the Federation of Banks chairman at this press conference reflects the magnitude of concerns within the banking sector."

Alongside this, Chairman Kim explained that the banking sector will make self-driven efforts to protect consumers. He emphasized, "In line with the enforcement of the Financial Consumer Protection Act, we have operated a joint task force (TF) within the banking sector to prepare a joint work processing plan. We will strive to eradicate incomplete sales and take the lead in protecting consumer rights."

On the other hand, regarding the financial authorities’ recommendation to limit financial holding companies’ dividend payout ratios to within 20% of net profits, he expressed a positive attitude, saying, "In the prolonged COVID-19 situation, I believe banks need to maintain sufficient loss absorption capacity to fulfill their role as a safety net for our economy." Since most financial holding companies have already accepted the authorities’ policy, it appears there is no need to emphasize unnecessary conflict factors.

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