Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Financial authorities increase pressure on banks
Financial Supervisory Service (FSS) Governor Lee Bok-hyun speaks during his visit to KakaoBank headquartered in Seongnam, Gyeonggi Province, Monday. Yonhap
By Anna J. Park
FSS to conduct regular inspection on Shinhan in March
By Anna J. Park
The Financial Supervisory Service (FSS) will be conducting a regulator inspection into Shinhan Financial Group and Shinhan Bank later this month, the watchdog agency said Wednesday. It will be the first of its kind conducted on Shinhan in four years.
The FSS' regular inspection takes place every two to five years, during which the financial watchdog thoroughly examines a financial company's overall management, ranging from corporate governance, executive appointments, internal control systems, banks' loan-to-deposit interest ratios and salary increases.
As it will be the first large-scale regular inspection of a major financial group since President Yoon Suk Yeol criticized bank executives' excessive profit-taking and bonus parties last month, market attention is now on how the inspections will be rolled out. Besides Shinhan, the FSS plans to conduct regular inspections on several other banks throughout this year.
“In its on-the-spot inspection, the FSS is likely to be focusing on some of the issues, such as bonus payments among other things, which have particularly raised issues lately,” an official from the FSS said.
Following President Yoon's policy direction to promote further competition in the banking industry in order to reduce harm caused by the existing oligopoly in the banking sector, the financial authorities ― the Financial Services Commission (FSC) and the FSS ― have launched a task force last Wednesday to work on the matter. The first working-level meeting of the task force is slated to be held on Thursday morning, while the task force team is expected to continue until June.
The task force team is mulling over whether to allow insurers and brokerages to enter into the payment, loan and foreign exchange markets, which used to be only accessed by bank licenses. Internet-only banks and other fintech companies are also expected to get more of a boost in competition against more traditional lenders, according to the government's policy direction.
The financial authorities are also currently working on a revision of a related law to overhaul banking corporate governance in the country, aiming to make the appointment process of executives as well as boards more transparent and predictable.
In addition, the Fair Trade Commission (FTC) launched collusion investigations earlier this week on five major banks ― Shinhan, KB Kookmin, Woori, Hana and NongHyup ― as well as the Industrial Bank of Korea (IBK) to see whether the lenders had colluded together in deciding loan interest rates and other charges imposed on clients. Both FSC and FSS plan to closely cooperate with the FTC, whenever the fair trade agency asks them for any help.
With these supplemental pressures coming from various fronts, banks are expected to come up with extended initiatives or programs for social contributions, including temporary interest rate cuts for small- and mid-sized businesses who are having difficulties in paying their debts.