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| gettyimagesbank |
By Lee Kyung-min
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| Hana Bank CEO Ji Sung-kyoo |
Criticism is expected to mount over "insensitive profit-sharing" since bonuses of up to 200 percent of their base wage come even though many intended beneficiaries of government emergency measures ― virus-hit small- and medium- enterprises (SMEs) ― are denied financing due to stringent lending requirements.
The access to cheap money is instead granted largely to young, salaried workers, whose creditworthiness is higher compared to small business owners.
Many 20- and 30-somethings have taken out mortgages or borrowed money to make stock investments, with the frenzy over the former driven by two dozen botched real estate policies that led to an over 80 percent spike in the median apartment price in Seoul over the past four years, according to data from the Citizens Coalition for Economic Justice (CCEJ).
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| KB Kookmin Bank CEO Hur Yin |
The "easy, undeserved" bonus is drawing protests from the public at large, translating into a political move to legislate a law dubbed as "profit-sharing," mostly by lawmakers from the ruling bloc.
Rep. Hong Ihk-pyo of the ruling Democratic Party of Korea urged banks to voluntarily participate in the initiative, since they take monthly interest payments without any difficulties despite the continued struggling of borrowers.
"Banks should allow delays in monthly interest payments and wait before seizing properties, in line with similar moves whereby landlords are postponing receiving monthly rent from tenants whose businesses are suffering," he said during an interview on a local radio program, Jan. 14.
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| Shinhan Bank CEO Jin Ok-dong |
"A few that survived the crisis have had no major difficulties, especially concerning their lending business defined by regular payment of monthly interest by borrowers, the easiest way to make money," he said.
Lenders' elevated risk amid the pandemic was partly mitigated by the government guaranteeing about 80 percent of money lent to low-credit, low-income borrowers usually considered high-risk borrowers.
This is another major buffer against the possible domino effect of insolvencies, the most-dreaded scenario for lenders. Default risks are largely subdued following the government involvement in managing financial outlays for small business owners, the self-employed and low-income earners.
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| Woori Bank CEO Son Tae-seung |
Meanwhile, banks are likely to put up at least 110 billion won to fill the government target of 500 billion won to be drawn to help the financing of low-income earners. The remaining 390 billion won will be put up by the government including from lottery funds and by savings banks and mutual finance contributions.
