"Second Citi Bank Blocking Law Emerges"...Concerns Over Shrinking Banking Industry Development (Comprehensive)

Assemblyman Min Byung-deok Introduces 'Partial Amendment to the Banking Act' as Main Sponsor

Financial Authorities Push for Closure Approval Measures... Reviewing the Need for Legal and Institutional Reforms

[Asia Economy Reporter Lee Kwang-ho] A measure requiring banks to obtain approval from financial authorities when closing part of their operations is being pursued. This is interpreted as an effort to prevent consumer harm in advance following the recent controversy over the phased closure of consumer finance business by Korea Citibank. 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 banks' 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 Bank Act" containing such provisions on the 9th.

Under Article 55 of the current Bank 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 stating that it was not subject to approval due to the absence of explicit regulations.

The Financial Services Commission judged that Korea Citibank's reduction of its business scope to focus on major banking operations could not be considered a "closure of banking business." The Commission plans to conduct in-depth reviews, including investigating overseas cases and consulting legal experts, regarding the need to expand approval targets under the Bank Act and reform related 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 closures of banking business, which have greater ripple effects." He added, "If the amendment passes, it will protect depositors and contribute to the stability of the financial market and the development of the national economy."

"Approach with Caution"... Concerns Over Infringement on Private Companies' Autonomy and Independence

However, industry and experts emphasize the need for a cautious approach. There are concerns that it could infringe on the autonomy and independence of private companies.

An official from a bank 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 limit the development of the banking industry, so it is necessary to approach 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 extent necessary to avoid infringing on banks' management rights."

Professor Oh Jung-geun of Konkuk University's Department of Economics criticized, "Banks are private companies," calling it a "nonsensical idea." He 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."

Professor Sung Tae-yoon of Yonsei University's Department of Economics also pointed out, "Requiring approval for closure itself is problematic," adding, "It is difficult to induce new competition in the relevant field. Ultimately, it could be unfavorable to financial consumers."

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