New bank federation leader urges lenders to seek mutual growth

Chief of Korean Federation of Banks (KFB) Cho Yong-byoung speaks during his inauguration ceremony at KFB headquarters in Seoul, Friday. Courtesy of KFB

The newly-appointed leader of the Korea Federation of Banks (KFB), Cho Yong-byoung, urged lenders to develop mutual growth plans that meet not only their objectives, but the public's expectations as well. He also asked the banking industry to reflect on whether they have fulfilled their social responsibilities.

These remarks were made during Cho's inauguration ceremony, which was held at the KFB headquarters in Seoul, Friday.

"The banking industry has not only been tasked with generating profits through innovation, but has also emphasized the significance of public interest and social responsibility," Cho said. "We need to consider whether the industry's efforts have adequately met public expectations."

Cho observed that the banking industry is currently under intense scrutiny from the public, as the country grapples with economic challenges stemming from a strained global supply chain, China's economic downturn, and rising household debts.

"If the economic ecosystem collapses, the banks within it cannot survive," Cho stated.

Those comments came as financial authorities are actively encouraging the banking industry to pursue mutual growth with the public, after lenders achieved record-high profits due to high interest rates. The banking industry, led by the KFB, is anticipated to announce detailed strategies and measures to support the public within this year.

"Despite banks aiming to be a solid support and foundation for households and businesses, the truth is they have not lived up to the public's expectations," Cho stressed. "We should reflect on why it has been so challenging to restore the public's trust, even with the banks' efforts to revitalize the economic system."

He added, "We need to develop mutual growth strategies that align with the public's interests, rather than solely from the perspective of the banks."

He urged the banks to improve customer protection and reinforce the responsibilities of their executive members after financial authorities recently launched an investigation into the country’s top commercial lenders and brokerages over the irresponsible sales of equity-linked securities (ELS), high-risk derivatives tied to the performance of the Hang Seng China Enterprises Index (HSCEI).

After the ceremony, Cho commenced his three-year term as the head of the lenders' lobby group.