Financial Services Commission Holds Meeting with Bank CEOs... Requests Cooperation for Promoting Competition

"Improvement Plans to Be Prepared by June... Requesting Bank Cooperation"

Kim So-young, Vice Chairman of the Financial Services Commission, is delivering opening remarks at the Financial Industry Globalization Task Force meeting held on the 13th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Yoon Dong-joo doso7@

On the 6th, the Financial Services Commission held a meeting with domestic bank CEOs to share the operational results of the 'Banking Sector Management, Business Practices, and System Improvement Task Force (TF)' being promoted to enhance competition in the banking sector, and requested future cooperation.

Kim So-young, Vice Chairman of the Financial Services Commission, attended the bank CEOs meeting held at the Korea Federation of Banks in Jung-gu, Seoul, in the morning, stating, "The authorities plan to prepare improvement measures for a total of six tasks, including promoting competition in the banking sector and improving the interest rate system, by the end of June," and added, "We ask banks to actively participate in the TF operations and cooperate to ensure that the improvement measures are implemented in the field."

The meeting was attended by Vice Chairman Kim, Kim Kwang-soo, Chairman of the Korea Federation of Banks, and bank CEOs nationwide. Vice Chairman Kim shared the main issues discussed and operational results of the TF over the past month with the bank CEOs at this meeting.

Through TF discussions, the authorities have decided to pursue the following regarding banks' deposit and loan operations so far: ▲ expanding the refinancing loan infrastructure to mortgage loans (by December) ▲ expanding the scope of online deposit brokerage services (demand deposit accounts) and business operators ▲ expanding disclosure of the interest rate spread between deposits and loans. To respond to financial market uncertainties triggered by the Silicon Valley Bank (SVB) incident, they plan to implement ▲ countercyclical capital buffer ▲ stress buffer capital introduction ▲ special loan loss reserve requirement introduction ▲ annual review and supplementation of banks' expected loss forecasting models.

Regarding measures to promote competition in the banking sector, such as new player entry and allowing non-bank payment settlements, Vice Chairman Kim said, "Regarding new player entry, it is necessary to create a contestable market where entry is possible, but only allow entry after strict screening to verify capabilities," and added, "Whether to allow payment settlements will be reviewed from the perspective of same function-same risk-same regulation, not by industry, considering risk and consumer benefit enhancement effects."

On the performance-based compensation system that sparked controversy over 'interest profiteering,' he emphasized, "Performance indicators should evaluate not only revenue increases due to market fluctuations but also innovation and sufficiently consider public interest, and payment methods should be diversified," and added, "Shareholder return policies should also consider stakeholders beyond shareholders, and it is necessary to sufficiently explain to the public and financial markets how the bank's profits are composed and how those profits are distributed."

Vice Chairman Kim stated, "Since the banking sector has been somewhat insufficient in preparing for the future, the TF aims to improve this and also draw a future blueprint for banks," and concluded, "Through these efforts, I believe the banking industry can firmly establish itself again as a trusted and beloved sector by the public and businesses."

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