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.
Banking groups fearful of 'unilateral' punishment from financial regulator
Korea Federation of Banks Chairman Kim Gwang-soo speaks during an online press conference at its headquarters in Seoul, Tuesday. Courtesy of Korea Federation of Banks
By Lee Min-hyung
By Lee Min-hyung
The head of a federation representing the interests of Korean banks said lenders have grown fearful of “unilateral” punishment by financial regulators, which has apparently heightened uncertainties for top management. Korea Federation of Banks (KFB) Chairman Kim Gwang-soo said Tuesday that the punitive measures were aimed at chastising bank chiefs who fail to maintain control over their businesses, but the rationale used by regulators remains unclear.
The comments centered on a recent decision by the Financial Supervisory Service (FSS) to deliver harsh sanctions on Woori Financial Group Chairman Son Tae-seung and Shinhan Bank CEO Jin Ok-dong over their involvement in attracting customers to invest in a soured fund.
The FSS took issue with the failure of the bank chiefs to maintain close watch over what investment products they sell. But most banks expressed concerns about a lack of logic in the punitive measures, while many blamed the financial watchdog of trying to shift all of the blame on top bank officials.
“We consider such disciplinary measures as being negative, as under that logic, bank leaders should control every single act committed by their employees to avoid possible sanctions, which is impossible,” Kim told reporters in an online press conference.
“Disciplinary measures should be made based on relevant and predictable legal standards, and banks and regulators should also enhance communication, preventing unilateral sanctions. Banks will then be able to strive to achieve autonomous management,” he said.
Kim also warned of the estimated effects of tech companies' aggressive inroads into the financial industry.
“The rapid rise of big tech firms raises concerns that banks may fall victim to reverse discrimination from existing regulations,” he said.
Traditional commercial lenders ― such as KB, Shinhan, Woori and Hana ― are crying foul, saying watchdogs should impose a similar level of regulations on tech companies when they expand into the financial sector.
“My view is that big tech and fintech firms should never be exempt from financial laws here,” he said. "Tighter regulatory standards should be established particularly for big tech firms to engage in fair sales activities because their influence is ever-growing."
Kim took office as the leader of the bank federation about three months ago. As this year's top priority, he pledged to keep supporting banking groups so they can help the virus-hit economy achieve a major rebound.