Jeong Eun-bo on 'Kakao Group Mukti' Controversy: "Stock Option System Issues... Improvement Needed"

Kakao Pay and Kakao Bank Executives Express Position on Stock Option Exercise
Director Jeong: "Protection of Market or Individual Investors Must Be a Premise"
Ruling and Opposition Presidential Candidates Propose LTV Relaxation... "Household Debt Management Is Top Priority"

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] Jung Eun-bo, Governor of the Financial Supervisory Service (FSS), addressed the moral hazard controversy surrounding the exercise of stock options by executives of financial companies such as Kakao Pay and Kakao Bank, stating, "I believe this is an issue that requires institutional improvement." Governor Jung expressed concern that the system is being operated without the premise of protecting the market or general individual investors.

On the morning of the 20th, after a 'Fintech Industry Meeting' held at Front1 in Mapo, Seoul, Governor Jung told reporters, "We will review the areas of institutional improvement related to stock options and make improvements if necessary."

The financial authorities' announcement to review institutional improvements regarding stock options is interpreted as a measure taken in consideration of the public backlash caused by the so-called 'Kakao Pay Eat-and-Run' controversy. In particular, as the controversy prolonged, Kakao recently announced measures to prevent recurrence, but criticism has intensified after it was belatedly revealed that Yoon Ho-young, CEO of Kakao Bank, also exercised stock options in the fourth quarter of last year. (Refer to our exclusive report on the 19th: [Exclusive] Kakao Bank CEO Yoon Ho-young also exercised stock options)

In response, Lee Jae-myung, the Democratic Party's presidential candidate, mentioned on the 19th that a thorough investigation by financial authorities and a system regulating the stock option exercise period are necessary regarding Kakao's eat-and-run controversy.

Regarding the information leak incident at the big tech company Naver Financial, Governor Jung said, "We will investigate within the necessary scope and guide improvements if there are any issues." He added, "If there are systemic problems overall after the investigation, we will also consider changing the system."

Governor Jung also revealed that the FSS's inspection system reform plan is nearing completion. He said, "Although I cannot specify the exact timing of the announcement of the inspection system reform plan, we will announce it soon once consultations with the Financial Services Commission are finalized." The core of this inspection reform plan is the continuation or abolition of comprehensive inspections.

Regarding Democratic Party candidate Lee Jae-myung's stance that the FSS Dispute Mediation Committee should be granted unilateral binding authority, Governor Jung avoided giving a direct answer, saying, "It is difficult to provide a conclusion without further discussion."

When asked about the views on major presidential candidates pledging to raise the Loan-to-Value ratio (LTV), he responded, "At this stage, I think it is important to prioritize household debt management," but added, "It is difficult to say that we will review it immediately in this manner."

Concerning concerns about the deterioration of soundness due to the recent mass listing of cryptocurrencies by exchanges, he said, "We have maintained a policy of not allowing Initial Coin Offerings (ICOs) so far," but added, "We will comprehensively review such matters, including mass cryptocurrency listings, in the future."

Regarding the progress of the review on the interest rate spread between loans and deposits, Governor Jung refrained from giving specific answers. He said, "We are examining individual banks one by one, but it is difficult to provide specific details yet," and added, "We will observe the market situation and so forth going forward."

In response to criticism that the LG Energy Solution subscription has caused instability in the short-term financial market, he said, "Since the current system was established after much discussion on Initial Public Offerings (IPOs), I think there are pros and cons," and added, "However, we will review whether there are any fine adjustments needed regarding disadvantages such as overheating in the short-term financial market."

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