[Reporter’s Notebook] Banks Become the Public Punching Bag

"A dagger flies and pierces my chest." This is what a commercial bank official said after President Yoon Suk-yeol recently continued his strong criticism toward the banking sector, including accusations of power abuse and servitude. Since the Yoon administration began, the "demonization of banks" has persisted, leaving bankers feeling like punching bags.

This is not the first time the Yoon administration has targeted banks. In February, President Yoon described banks as public goods and criticized their bonus parties. Since then, banks have proposed coexistence plans, but less than a year later, they are once again being treated like "loan sharks."

As the arrows are once again aimed at the banking sector, banks have become busy. The four major financial holding companies held meetings through the weekend to prepare coexistence packages, including support measures for small business owners and interest reduction plans. However, many view these coexistence plans as mere temporary measures. No matter how much social contribution they make or coexistence plans they propose, they never know when they will be labeled as malicious corporations again.

Of course, the negative perception toward banks is understandable. Ordinary people are suffering from high inflation and high interest rates. Small business owners find the increasing loan interest burdensome day by day amid the economic downturn. However, the question remains whether this problem is solely the banks' fault.

The current high interest rates were not deliberately raised by banks to increase profits. Due to the COVID-19 situation, global monetary policies shifted toward tightening, leading to an increase in the base interest rate. This domestic and international economic environment was reflected in market interest rates, causing banks' rates to rise as well. While banks' interest income increased during this process, conversely, when interest rates fall, banks' profits decrease, and banks bear the risks to prepare for such scenarios. The frame that banks abuse their dominant market position is somewhat unfair from the banks' perspective. Banks operate under government licenses. It is the government that regulates the number of banks.

However, the Yoon administration seems to be trying to appease the public by "beating up banks" for now. In fact, ahead of next year's general election, showing a stance of punishing banks that earn interest income with "their hands tied behind their backs" can help create positive public opinion toward the government. But is this desirable for our economy? One of the frequently asked questions when domestic financial companies go to overseas IR is the government's stance. The government's perception of the financial industry as a public good negatively affects foreign investors. In the financial sector, lamentations about the future of finance due to the government's hostile attitude can be heard here and there.

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