Top regulator opposes mega-bank scheme

By Kang Seung-woo

Amid the re-emerging idea of a mega-bank, the nation’s top financial regulator said Wednesday that size does not matter in terms of increasing a bank’s global competitiveness.

“Efficiency is more important than size. Just beefing up the size of a bank is not a big deal. What is more significant is how to operate in the financial market,” Financial Services Commission (FSC) Chairman Kim Seok-dong told reporters before attending a policy coordination meeting at the Gwacheon Government Complex.

``Who coined the term mega-bank? I have never referred to the word. The key factor to shake up the financial industry is for it to be efficient in operation,” he said.

Kim’s remarks came with speculation that further efforts are being made to create a super-size bank by artificially merging two or more retail banks under the supervision of the government.

Since former Strategy and Finance Minister Kang Man-soo, an avid advocate of a giant lender, took the helm of the state-run Korea Development Bank (KDB) Financial Group last week, there have been whispers that the government will seek to create such an entity.

While serving as minister of strategy and finance, the life-time bureaucrat insisted that Korea should have a mega-bank by merging Woori Financial Group, another state-run entity up for sale, with the KDB Financial and the Industrial Bank of Korea (IBK) to globalize the financial industry.

The creation of a mega-bank which can compete on the international stage was a key agenda item for the Lee Myung-bak administration and Kang, known as the President’s tutor on the economy, was its designer.

Kim, meanwhile, unveiled a plan to resume the stalled privatization of Woori Financial.

“The FSC may release a plan to sell a major stake in Woori Financial by the second quarter of this year,” he said.

The government-run Korea Deposit Insurance Corp. (KDIC) currently owns a controlling 57 percent stake in the nation’s second-largest holding firm.

In November last year, the FSC put the government stake up for sale but the Public Fund Oversight Committee (PFOC) suspended the process in December after two prospective buyers withdrew bids due to expensive premium costs required to take over the controlling share.