Under Pressure from President Yoon... Submission of Win-Win Plans to Authorities of 5 Major Banks Before Meeting on the 16th

Ahead of the June 16 Meeting Between Financial Authorities and Financial Group Chairpersons
Last Week, Banks Submitted Win-Win Finance Plans
"How Far Should Support Go?" Banks Restless

Ahead of the meeting between financial authorities and the heads of financial holding companies scheduled for the 16th, commercial banks submitted a win-win finance plan to the financial authorities last week. This plan is known to include interest rate reductions targeting household debt and small business owners, as well as financial support for vulnerable groups. Despite submitting the win-win finance plan, banks remain on high alert.

This is because there is a possibility that the five major financial holding companies (KB, Shinhan, Hana, Woori, NH Nonghyup) will not stop at presenting individual support measures. An executive from a commercial bank said, "When Shinhan Financial Group and Hana Financial Group each announced support measures worth 100 billion won earlier this month, the authorities' stance was that 'this is insufficient,'" adding, "Chairman Kim Ju-hyun of the Financial Services Commission and Governor Lee Bok-hyun of the Financial Supervisory Service may mention other win-win finance cards during their meeting with the chairmen."

The demand for win-win finance from the banking sector began with President Yoon’s criticism of "interest profiteering." On the 30th of last month, President Yoon Seok-yeol said, "Ordinary people sigh, feeling like they are slaves to the banks," prompting financial authorities to start pressuring banks. Collecting and reviewing win-win finance plans from each bank ahead of the meeting with the financial holding company chairmen appears to be an effort to prepare stronger measures than in the past, reflecting the weight of President Yoon’s remarks.

Chairman Kim Ju-hyun of the Financial Services Commission has also conveyed this stance to the banking sector. Regarding the win-win finance plans presented by Shinhan and Hana Financial Groups, Chairman Kim said on the 7th, "My judgment is not what matters," and added, "We are trying to find a plan that satisfies public consensus." Governor Lee Bok-hyun of the Financial Supervisory Service also pressured banks to support vulnerable groups on the 6th, stating, "Those in the banking industry need to realistically assess whether banks could earn 60 trillion won in interest income through innovations as diverse as those in the semiconductor or automobile industries."

Banks are increasingly troubled by the need to present additional win-win finance plans. Kim Kwang-soo, chairman of the Korea Federation of Banks, proposed to the chairmen of each financial holding company, "Rather than responding individually, let us jointly prepare new measures that provide practical help to financially vulnerable groups." Accordingly, the meeting between the five major financial holding company chairmen and Chairman Kim scheduled for the 13th was canceled, citing that prior coordination was inappropriate.

Concerns are also emerging within the financial sector that "the level of government-controlled finance is gradually increasing." In February of this year, banks, led by the Korea Federation of Banks, announced plans to promote a 'bank social contribution project' worth more than 10 trillion won over the next three years. The funds collected from joint social contribution projects by the banking sector are to be used for supporting low-income and low-credit individuals, additional contributions for special guarantees for small and medium enterprises, and expanding the supply of financial products for ordinary citizens. A representative from a commercial bank said, "We have to come up with another support plan even before the 10 trillion won support starts," adding, "We don’t know how far the authorities want us to go."

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