Banking group CEOs under pressure to reassure foreign investors over stock decline

Headquarters of four major banking groups, Shinhan, Woori, KB Kookmin and Hana, in Seoul / Korea Times file

The leaders of four major banking groups in Korea are facing pressure to reassure foreign investors as domestic banking stocks experience a significant downturn, according to industry officials Friday.

The urgency comes ahead of potential meetings in September between the CEOs of KB, Shinhan, Hana and Woori Financial Groups and representatives from global investment banks JP Morgan and Morgan Stanley during their visits to Seoul.

In addition, each CEO is scheduled to embark on overseas investor relations trips in October, coinciding with the 2025 Annual Meetings of the World Bank Group and International Monetary Fund.

These global gatherings are expected to draw investors, economists and policymakers from around the world, intensifying the need for transparent communication on corporate strategy and shareholder value.

“These occasions intensify the need for clear communication to restore investor confidence, especially as banking stock prices remain on a downward trajectory,” said Jung Eui-jung, head of the Korean Stockholders’ Alliance.

According to bourse operator Korea Exchange, the four banking groups have seen their share prices fall by an average of 11.7 percent from recent peaks.

Hana Financial Group experienced the sharpest drop at 14.8 percent, followed by KB Financial Group at 13.94 percent, Shinhan Financial Group at 9.8 percent and Woori Financial Group at 8.3 percent.

The declines are particularly concerning given the high levels of foreign ownership — KB at 77.57 percent, Hana at 66.77 percent, Shinhan at 59.61 percent and Woori at 47.11 percent.

The decline in share price was driven by foreign investors who have been net sellers in recent months because of growing uncertainty surrounding new government policies and mounting regulatory burdens.

Under the Lee Jae Myung administration, banks are being asked to contribute 400 billion won ($288 million) to the so-called “bad bank” designed to handle long-term delinquent loans.

They also face possible contributions to National Growth Fund — a 150 trillion won flagship initiative aimed at spurring economic growth through public-private cooperation.

Other regulatory pressures include a proposed doubling of the education tax from 0.5 percent to 1 percent for financial firms earning over 1 trillion won annually, potential fines of up to 7 trillion won for the alleged mis-selling of equity-linked securities and over 1 trillion won in possible penalties related to suspected collusion on loan-to-value ratios.

“While each financial burden might be manageable on its own, their cumulative impact is weighing heavily on investor sentiment,” Samsung Securities analyst Kim Jae-woo said. “Foreign investors, in particular, are concerned about the increasing policy uncertainty and regulatory risks.”

As for upcoming visits by the JP Morgan and Morgan Stanley representatives, an industry official said the banking CEOs should be ready to answer questions about maintaining shareholder value amid regulatory challenges.

The industry official urged the CEOs to take a more active role concerning investor relations trips, noting that investors want direct answers from the top in uncertain times.