Savings Banks' 'Interest Overcharging' Controversy... Jung Eun-bo: "Will Encourage Reduction if Necessary After Inspection" (Comprehensive)

"Car Insurance Premium Reduction... Guiding Reduction Direction Considering Profitability"

On the 1st, the Financial Supervisory Service held a meeting with savings bank CEOs at the Seoul President Hotel. (From left) Park Chan-jong, CEO of Incheon Savings Bank; Oh Hwa-kyung, CEO of Hana Savings Bank; Lim Jin-gu, CEO of SBI Savings Bank; Jung Eun-bo, Governor of the Financial Supervisory Service; Park Jae-sik, Chairman of the Korea Federation of Savings Banks; Park Ki-kwon, CEO of Jinju Savings Bank; Yang Soon-jong, CEO of Star Savings Bank; Heo Heung-beom, CEO of Kiwoom Savings Bank.

[Asia Economy Reporter Kim Jin-ho] Jeong Eun-bo, Governor of the Financial Supervisory Service (FSS), stated on the 1st that regarding the controversy over savings banks earning enormous interest profits with a loan-deposit interest rate spread four times that of commercial banks, "We will find a way to encourage lowering it if necessary after inspection."

Governor Jeong made these remarks after meeting with reporters following the 'Savings Bank CEO Meeting' held at the President Hotel in Seoul. Six representatives of savings banks, including Park Jae-sik, Chairman of the Korea Federation of Savings Banks, and SBI Savings Bank, attended the meeting.

Governor Jeong said, "I am aware that there has been recent social controversy regarding the loan-deposit interest rate spread," adding, "Both first-tier and second-tier financial institutions are conducting their own inspections." He continued, "If there are parts that need to be lowered, we will consider ways to encourage that."

According to data submitted to the National Assembly's Political Affairs Committee member Kang Min-guk of the People Power Party by the FSS, last year, the savings bank sector's net interest margin income was 5.031 trillion won. This represents a 20.3% increase compared to two years ago, and over three years, the total net interest margin income earned by the savings bank sector reached 13.695 trillion won.

The average loan-deposit interest rate spread of savings banks was 7.2 percentage points, about four times larger than the approximately 1.9 percentage points of commercial banks.

Governor Jeong also elaborated on the regulatory relaxation allowing loans only to borrowers (project operators) who can finance more than 20% of the funds for project financing (PF) businesses with their own capital. He said, "PF loans were the biggest cause during the savings bank crisis," but added, "Savings banks have been managing PF loans, and considering regulatory arbitrage issues with other sectors, we will review this in a way that resolves these issues."

When asked whether the FSS had provided next year's total household debt management targets for savings banks, he replied, "The FSS has not made a judgment," adding, "We plan to work closely with the Financial Services Commission to develop specific operational plans." According to the financial sector, the target growth rate for household loans by savings banks next year is about 10-11%, roughly half of this year's level.

Regarding the introduction of a differentiated supervisory system considering polarization between large and small-to-medium savings banks, he explained, "Since the market influence varies depending on size, we plan to operate inspections and supervision flexibly, taking market risk into account."

In response to a question about promoting insurance premium reductions to non-life insurance companies before calculating next year's automobile insurance premiums, he said, "Since insurance premiums are determined by market prices, it is difficult and undesirable for the FSS to intervene directly," but added, "However, if it is necessary to encourage premium reductions considering the overall profitability of insurance companies, we will do so."

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