Jeong Eun-bo "The Savings Bank Crisis Must Never Happen Again"... Risk Management 'Warning'

Financial Supervisory Service - Savings Bank Sector Meeting

Jeong Eun-bo, Governor of the Financial Supervisory Service, is delivering opening remarks at the 'Life Insurance CEO Meeting' held on the 25th at the Millennium Hilton Seoul Hotel in Jung-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Jin-ho Kim] Jeong Eun-bo, Governor of the Financial Supervisory Service, emphasized on the 1st, "There must never again be a case where the insolvency of savings banks spreads as a risk to the financial system."

At the 'Meeting with CEOs of Savings Banks' held at the President Hotel in Seoul on the same day, Governor Jeong stated, "Since savings banks have previously posed a significant burden on the national economy, the importance of proactive risk management is once again highlighted."

This is interpreted as a warning message to the industry that, amid growing domestic and international economic uncertainties, a recurrence of the so-called 'Savings Bank Crisis' of 2011 must be prevented. Governor Jeong stressed, "In a situation where global economic uncertainty persists, the accumulated household debt combined with rising interest rates could lead to a sharp adjustment in asset prices."

Governor Jeong said that in performing supervisory and inspection duties over savings banks, he will seek harmony and balance between proactive and reactive supervision, just as with other financial sectors. He stated, "Based on lessons learned from past large-scale restructuring experiences, proactive supervision is paramount," and added, "We will strengthen crisis situation analysis and operate inspection cycles and scopes flexibly for each savings bank to enable preemptive responses to vulnerable risk areas."

He continued, "Considering the deepening polarization between large and small-to-medium savings banks, we will introduce a differentiated supervisory system appropriate to asset size."

In particular, since savings banks serve as regional community financial institutions, trust is paramount, and thus they must be more devoted to consumer protection. Governor Jeong said, "To ensure the early establishment of the Financial Consumer Protection Act, we will supplement deficiencies through on-site inspections," and added, "We will also expand debt adjustment to support the normal economic activities of low-income individuals facing financial difficulties due to COVID-19." Furthermore, he mentioned plans to rationally improve the interest rate calculation system for savings banks and to activate the right to request interest rate reductions.

He also expressed intentions to ease certain regulations on savings banks in line with the changing financial environment. First, he said they will improve regulations that make it difficult for savings banks to participate in loan consortia and expand funding supply to promising low-credit small and medium enterprises through the activation of relationship banking. Additionally, to expand user choice and improve access to financial services for savings bank customers, support will be provided for the establishment of a financial platform by the Korea Federation of Savings Banks.

Meanwhile, the meeting was attended by Governor Jeong, Park Jae-sik, Chairman of the Korea Federation of Savings Banks, and six representatives from savings banks including SBI Savings Bank.

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