Lee Bok-hyun "Monitoring Bank Deposit Competition... Executive Meetings if Necessary"

Lee Bok-hyun, Governor of the Financial Supervisory Service

Lee Bok-hyun, Governor of the Financial Supervisory Service, ordered strengthened management through monitoring and executive interviews regarding the intensifying deposit competition among banks.

On the 2nd, following the Federal Open Market Committee (FOMC) decision to keep the benchmark interest rate unchanged, Governor Lee held a "Financial Situation Review Meeting" to examine financial market trends and domestic and international risk factors.

Governor Lee stated, "The intensified deposit competition in the financial sector aimed at attracting high-interest deposits and expanding scale may lead to further increases in loan interest rates, thereby increasing the interest burden on small business owners and self-employed individuals." He urged, "Closely monitor indicators related to excessive competition such as overall deposit interest rate trends in the financial sector, fund flow trends, and asset growth rates, and when necessary, induce sound management through executive interviews."

He continued, "In a situation where high interest rates persist, the increased principal and interest burden on households could act as a potential risk factor for our economy in the future," and ordered, "Guide the increase in household loans to be managed at an appropriate level."

He also emphasized strengthening the daily monitoring system for deposit and refund trends by region, stating, "Be especially cautious about the liquidity situation of financial companies at the end of the year by re-examining contingency plans to prepare for any sudden capital outflows, and respond proactively."

Furthermore, Governor Lee noted, "Recently, some companies have been changing their funding sources from corporate bonds to bank loans or commercial paper (CP) due to market uncertainty and interest rate burdens," and ordered close monitoring of refinancing trends in the corporate bond and short-term funding markets as well as any widening of credit spreads.

He added, "We will strengthen cooperation and preparedness with related agencies to communicate closely with the market and, if necessary, promptly discuss and implement market stabilization measures."

According to the Financial Supervisory Service, among 60 companies whose corporate bond balances decreased by more than 50 billion won compared to the beginning of the year, 20 companies repaid with bank loans, 5 with CP, 11 with private placement bonds, and 24 with their own funds.

He said, "The seasonal characteristic of increased financial market volatility toward the end of the year is being amplified by external factors such as the Israel situation," and urged, "Maintain an emergency system until the end of the year and make every effort to ensure the stability of financial markets and industries."

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