Lee Bok-hyun "Banks Have Room to Adjust Additional Interest Rates... Need to Monitor Interest Rate Burden"

Lee Bok-hyun, Governor of the Financial Supervisory Service, is attending and speaking at the 'Private Fund Management Company CEO Meeting' held on the 13th at the Kensington Hotel in Yeouido, Seoul. Photo by Dongju Yoon doso7@

[Asia Economy Reporter Bu Aeri] On the 13th, Lee Bok-hyun, Governor of the Financial Supervisory Service, said, "Banks have some discretion in adjusting the additional interest rates."

After concluding a meeting with representatives of institution-only private equity fund management companies at the Kensington Hotel in Yeouido, Seoul, Governor Lee told reporters, "I advised individual banks to review the situation if they have some capacity, considering the heavy burden on households and businesses caused by excessive loan interest rate hikes," adding this statement.

Governor Lee explained, "It is extremely inappropriate and impossible for financial authorities to intervene when the market is functioning well," but added, "I have consistently said that intervention is necessary if there is excessive concentration in the market."

He continued, "Earlier this year, although the short-term financial market showed some stability, it is still difficult to say it has fully normalized, so I have been expressing my stance on bank interest rates."

Earlier, at an executive meeting on the 10th, Governor Lee urged, "During a period of rising interest rates, banks should avoid excessively raising loan interest rates compared to market interest rates and borrower creditworthiness," and requested, "Please continue efforts to enhance the rationality and transparency of the interest rate calculation system by continuously monitoring the banks' interest rate setting and operation practices and improving any shortcomings."

In response, the Korea Federation of Banks explained that the interest rate spread between deposits and loans is a short-term phenomenon, and commercial banks consecutively lowered interest rates on mortgage loans and jeonse (long-term deposit) loans.

Governor Lee further explained that the financial authorities' request for banks to refrain from raising deposit interest rates would also influence the lowering of loan interest rates.

He said, "There is a time lag for the reduction in deposit interest rates to be transmitted to loan interest rates through COFIX (Cost of Funds Index)," adding, "The trend effect from the reduction in deposit interest rates will naturally appear after the next COFIX announcement."

Governor Lee added, "The COFIX announcement will soon follow the 25 basis points (1bp = 0.01 percentage point) increase in the base interest rate, and as it continues through February and March, it is a manageable trend, so I hope that banks will not have to bear a greater burden in the future."

Regarding the Korea Financial Group's Executive Candidate Recommendation Committee's decision to limit candidates for the next chairman to those with CEO experience, Governor Lee said, "I do not know the details," but criticized, "If there is a criterion that restricts a specific candidate group, it is undesirable."

He added, "I think it is even more undesirable if such restrictions cause misunderstandings that a particular person is being considered as a chairman candidate."

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