"The Second Citi Bank Blocking Law Emerges"... Concerns Over Bank Management Rights Infringement

Financial Authorities Push for Business Closure Approval Measures... Review Necessity for Legal and Institutional Reforms
Industry: "Possibility of Bank Development Reduction... Need for Procedural and Institutional Supplementary Measures"

[Asia Economy Reporter Kwangho Lee] A plan is being promoted to require banks to obtain approval from financial authorities when partially closing branches. This is interpreted as an intention to prevent consumer damage in advance caused by the phased closure of consumer finance operations by Korea Citibank, which has recently been controversial. Experts advise that prior approval is necessary for consumer protection measures, but the scope of business closure should be clearly defined to avoid infringing on the bank's management rights.

According to the National Assembly Legislative Information System on the 11th, Min Byung-duk, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, introduced the "Partial Amendment to the Banking Act" containing such content as the main sponsor on the 9th.

Under Article 55 of the current Banking Act, mergers, dissolutions, and closures of banking businesses require approval from the Financial Services Commission. However, there are no separate regulations for partial closures.

Last year, there was controversy over whether the phased closure of consumer finance by Korea Citibank required approval from the Financial Services Commission, but the Commission issued an authoritative interpretation that it was not subject to approval due to the absence of explicit regulations.

The Financial Services Commission judged that it is difficult to consider Korea Citibank's reduction of business scope while continuing major banking operations as a "closure of banking business." The Commission has planned to conduct in-depth reviews, including investigating overseas cases and consulting legal experts, regarding the need to expand approval targets under the Banking Act and improve laws and systems.

Representative Min explained, "From the customer's perspective, considering that the transferee comprehensively continues the previous business, it is consistent with fairness and system to require Financial Services Commission approval even for partial closure of banking business, which has a greater ripple effect."

However, the industry and experts hold the view that a cautious approach is necessary due to concerns that it may infringe on the autonomy and independence of private companies.

A bank official stated, "While the direction under the major premise of reducing jobs in the banking sector and protecting financial consumers may be correct, it could infringe on the autonomous business rights of private companies," adding, "Ultimately, it could reduce the development of the banking industry, so it is necessary to approach this carefully along with procedural and institutional supplements."

Another official explained, "It is necessary to define the scope of partial business closure and regulate it by presidential decree to the minimum necessary extent so that it does not infringe on the bank's management rights."

Professor Oh Jung-geun of Konkuk University's Department of Economics criticized, "Banks are private companies," calling it a "ridiculous idea." Professor Oh said, "Because state control and political finance are rampant in the financial industry, such bills are flooding in," and criticized, "The reason why Korea's financial competitiveness remains around the 30th place, lower than the national competitiveness ranking, is due to this."

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