[The Editors' Verdict] Thoughts on Lee Bok-hyun's 'Win-Win Finance'

Financial Supervisory Service (FSS) Governor Lee Bok-hyun's pressure for 'win-win finance' is spreading from banks to second-tier financial institutions such as card companies and insurance firms. Given the nature of finance as a domestic and regulated industry, there is a positive view that it should help economically disadvantaged people and vulnerable groups. On the other hand, there is a negative view that in a market economy, financial companies should operate autonomously, and forcibly twisting their arms to do so is unnatural and coercive.

It was confusing how to see this. It seems that every time Governor Lee's actions emerged, the feeling was different. I tried to organize the thoughts I had each time.

From February to March, Governor Lee visited the four major commercial banks?KB Kookmin, Shinhan, Woori, and Hana Banks?as well as BNK Busan Bank, DGB Daegu Bank, and Gwangju Bank in succession, and the banks poured out financial support worth 800 billion won, including loan interest rate cuts.

(With COVID-19 and economic downturn, everyone is struggling, yet banks are posting net profits of 2 to 3 trillion won, and banks are making easy interest income (net interest margin) as if "swimming while holding the ground." Helping those in difficulty is a natural thing. Although banks said they conduct social contribution projects, they are still recording record-high net profits.)

On June 29, Governor Lee attended a sponsorship ceremony for vulnerable groups and a small business owners' meeting with Lim Jong-ryong, Chairman of Woori Financial Group, and Park Wan-sik, President of Woori Card. On that day, Woori Card announced a 220 billion won win-win finance plan for small card merchants and vulnerable groups. Governor Lee said, "I hope win-win efforts like those of Woori Card will expand throughout the financial sector," and urged, "Not only banks and insurance companies but also card companies and financial investment (securities) firms should strive to develop various win-win finance products."

(Perhaps because Chairman Lim Jong-ryong is a former bureaucrat, it seems he scratched the itch properly. Governor Lee seemed to want to pressure only the banks to some extent and then finish. It has already been three months since the banks were pressured. Since Chairman Lim pumped up the effort, Governor Lee seems very excited. Now they say card companies, insurance companies, and securities firms must also come up with win-win finance plans, but isn't this going a bit too far?)

After Woori Card, Hyundai Card and Lotte Card also announced win-win finance plans, and on July 17, Shinhan Card, the industry leader, announced a 400 billion won win-win finance plan.

(The authorities are openly pressuring for win-win finance, so everyone seems to have no choice but to comply. Card companies said their first-quarter earnings (net profit) this year were halved compared to the same period last year or decreased by 20-30%, making it very difficult, yet they still put out several hundred billion won.)

On July 13, Hanwha Life became the first insurance company to join win-win finance. Hanwha Life announced the '2030 Big Money Preparation Stepping Stone Savings Insurance (tentative name).' It is a 5-year maturity savings insurance product targeting those aged 20-39 with household income below 200% of the median, offering a basic guaranteed interest rate of 5% for five years, with monthly payments ranging from 100,000 to 500,000 won.

(Insurance companies said they had few products targeting small business owners and that their products were complicated, causing much concern, but they ultimately released a savings-type product. It seems they really put a lot of thought into it.)

Governor Lee said on that day, "Unlike banks, which found it relatively easy to announce win-win finance products due to product characteristics, non-bank sectors such as capital companies, insurance, and securities face difficulties in terms of soundness and operational capacity," and added, "Please understand that we are not forcing or demanding win-win finance from companies that lack capacity or for whom it is inappropriate in their portfolio."

(Did Governor Lee also think his actions were too excessive? He says they are not forcing or demanding win-win finance from companies lacking capacity or where it is inappropriate? But until now, it seems he has been applying pressure. And does this mean companies with capacity or appropriateness should follow by announcing win-win finance plans? It seems really tough to operate a financial company in Korea. Even if you comply with codified laws, you practically have to live by anticipating the intentions of the Financial Supervisory Service Governor.)

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