COVID Loan Extension 'Under Discussion'... Eun Seong-su Urges Financial Holdings to Create Jobs (Comprehensive)

"Thorough Review of Positive and Negative Effects Followed by Sufficient Opinion Gathering"

[Asia Economy Reporters Sunmi Park and Jinho Kim] On the 10th, financial authorities and the five major financial holding companies failed to reach a conclusion on whether to extend the COVID-19 financial support, which is scheduled to end at the end of September, during a private meeting. They decided to make a decision after thoroughly reviewing the positive and negative effects of the current maturity extension and repayment deferral support measures and collecting sufficient opinions.

On the morning of the same day at 8 a.m., Eun Sung-soo, Chairman of the Financial Services Commission, held a private meeting with the chairmen of the five major financial holding companies at the Korea Federation of Banks to discuss financial sector issues related to COVID-19. Attendees included KB Financial Group Chairman Yoon Jong-kyu, Shinhan Financial Group Chairman Cho Yong-byeong, Woori Financial Group Chairman Sohn Tae-seung, NH Nonghyup Financial Group Chairman Sohn Byung-hwan, and Hana Financial Group Vice Chairman Ham Young-joo.

This meeting was arranged amid growing calls to further extend the financial support measures, which are set to expire in September, due to the fourth wave of COVID-19. Over the past year, the entire financial sector has provided financial support such as maturity extensions and repayment deferrals amounting to a total of 204 trillion won (as of the end of June) for small and medium-sized enterprises and small business owners.

Chairman Eun told the financial holding company leaders, "We are carefully reviewing the positive effects of the current maturity extension and repayment deferral support measures and the negative effects that may accumulate if these measures are prolonged," adding, "We will fully collect opinions from the financial sector during this process." Regarding the lack of a conclusion despite exchanging opinions, Chairman Eun said, "Whether to extend the maturity or not is not a simple matter with just two options."

"We will establish a meticulous supervisory network to achieve the household debt growth rate target"

Regarding the household debt issue, financial authorities conveyed the need to tighten controls further. Chairman Eun acknowledged that the expansion of private debt was inevitable during the COVID-19 recovery process but emphasized the necessity to consider risk factors seriously from now on due to the excessively rapid growth rate. He admitted, "We said we would suppress household debt, but due to real demand issues, we could not respond properly," and shared that he exchanged views with the financial holding company chairmen on whether to suppress real demand or leave it as is.

He stated that a meticulous supervisory network will be established to ensure that household debt is stably managed within the financial authorities' growth rate target (5-6% within this year) and requested proactive management to prevent household debt from becoming a latent risk to the Korean economy and financial companies in the future. In response, the financial holding company chairmen pledged to thoroughly check whether there are any household loans unrelated to real demand or that might fuel asset bubbles.

There was also discussion on creating quality jobs in the financial sector. Chairman Eun urged active participation in "youth recruitment" and requested that the financial holding companies support the upcoming "2021 Financial Sector Joint Recruitment Fair" scheduled for next month.

After the meeting, Chairman Eun told reporters, "I understand that expanding recruitment is not easy, but I asked the chairmen to pay attention," adding, "I also asked them to consider increasing youth recruitment structurally through adjustments such as labor cost management." However, while the financial holding company chairmen agreed on the social role of creating youth jobs, they reportedly expressed reluctance, citing that "digitalization is progressing rapidly, making it impossible to increase employment as freely as in the past."

Meanwhile, during the meeting, the financial holding company chairmen expressed concerns to Chairman Eun regarding the debt refinancing platform scheduled to launch in October. Chairman Eun said, "I have come to understand that the financial holding company chairmen are not welcoming the debt refinancing platform," and added, "We will consider their opinions and review this matter."

Following Chairman Eun, nominee for Financial Services Commission Chairman Ko Seung-beom also emphasized communication with the financial sector, so private meetings between the authorities and financial holding company chairmen on financial issues are expected to continue. Regarding Ko’s mention of pursuing ‘market-friendly’ policies, Chairman Eun said, "There may be slight differences between the market and government directions concerning market-friendly policies, but the important thing is to exchange opinions through dialogue."

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