Korean financial firms on Wednesday rebutted rising public criticism of their large paychecks and high profit margins as the ongoing "Occupy" protests in the United States and elsewhere fueled local anger about corporate greed.
Following the start of the "Occupy Wall Street" movement in September, Korean activists and consumers have staged rallies urging the local finance industry to abandon its greed and risky practices.
Some 250 protesters gathered at Seoul's key financial district of Yeouido last week and around 70,000 restaurant owners demonstrated Tuesday to demand lower credit card commissions.
Heeding the increasing backlash, Financial Services Commission Chairman Kim Seok-dong, the country's top financial regulator, has called for the industry to rid itself of excessive greed and reflect upon its morality.
The rush of criticism has led to tangible results in some areas. Credit card firms reduced the commission they charge small retailers and the heads of both Woori Finance Holdings Co. and Shinhan Financial Group Co. have said high dividend payments may be unlikely this year.
Industry officials, however, said curbing profit-focused business practices and overhauling their pay systems is unreasonable.
"I don't believe the industry pays excessive salaries," said an official at Korea Financial Investment Association, an umbrella group of local securities firms. "There are no clear solutions to consider regarding the high salary and high dividend issue."
"We've considered officially refuting recent criticism, but decided it would only worsen the negative sentiment toward us," said another official at the organization.
Local brokerages had been rapped for doling out massive bonuses of up to 2 billion won ($1.8 million) to some sales executives.
Meanwhile, banks have been actively defending themselves against charges they are likely to rake in a record 20 trillion won combined net profit this year on the back of widening interest margins.
"The widening gap between lending and deposit rates is not due to banks' efforts to maximize their profits, but an inevitable result of an overall rise in rates," the Korea Federation of Banks (KFB) said in a statement.
KFB stressed lenders have tightened salaries after the 2008 global financial crisis, adding the average salary of all workers at the country's top four banks is only 73 percent of those employed at the five largest conglomerates.
Market watchers said financial firms should further refrain from excessive profit-taking practices and sharp salary rises.
"Since finance is a regulatory industry, firms do not compete as much," said Shin Min-young, a researcher at LG Economic Research Institute. "They should be prudent about raising paychecks."
The financial regulator, meanwhile, plans to indirectly push banks on concerns that direct intervention would go against free market rules. (Yonhap)