Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Financial leaders, top regulator to discuss banks' financial soundness
Financial Services Commission Chairman Eun Sung-soo, second from left, speaks during a meeting with government officials in Seoul, on July 16. Yonhap
By Lee Min-hyung
By Lee Min-hyung
Leaders of the nation's top five financial holding firms plan to discuss whether they should extend due dates on loans provided to virus-hit companies here, during a planned meeting with a top regulator.
According to the local banking industry, Tuesday, the heads of KB, Shinhan, Woori, Hana and NH NongHyup will hold a breakfast meeting with Financial Services Commission Chairman Eun Sung-soo on Friday.
The top financiers are known to hold a closed-door meeting once each quarter to discuss pending issues on the industry. But this time, Eun will also take part in the meeting and hear complaints from the financial industry due to the recent market confusion induced by the spread of the coronavirus.
Eun is expected to urge the top management of the banking industry to extend loan maturity and interest payments. Earlier, the financial industry joined hands with the financial authorities who called to offer special benefits for companies and small business owners until the end of September.
The government and financial authorities want the financial circles to further extend the timeline for benefits, as the virus shock still remains in place and the real economy is showing little in the way of signs of rebound, for now.
“We need to discuss what we have to do after September, as the COVID-19 situation is showing no signs of abating,” Eun said in a recent press conference.
Expectations are that Eun will press the leaders of the banking industry to extend the maturity for principal redemption for another three to six months for the virus-impacted parties.
Local banks are in a growing dilemma over whether to accept the request from the authorities, as their profitability keeps worsening due in part to their “unilateral support.”
“Accepting the call from the government is a step in the right direction at a time when the local economy is facing setbacks due to the unexpected virus panic,” an official from a major lender here said.
“But it is true that banks will continue bearing the financial burden, which may result in worsening our financial soundness,” the official said.
Bank of Korea (BOK) Governor Lee Ju-yeol also concern during his recent meeting with leaders from commercial lenders here.
“We need to take a longer-term viewpoint in dealing with the COVID-19 situation,” he said. According to Lee, the government needs to reconsider whether the current one-sided support from the financial firms to virus-hit parties is a step in the right direction.