Regulators urge financial groups to minimize interest rate hikes

The Korea Times

The Korea Times

Finance

Mon, October 2, 2023 | 09:25

Companies

Regulators urge financial groups to minimize interest rate hikes

Posted : 2023-03-31 15:35

Updated : 2023-04-02 10:42

Financial authorities and financial group leaders held a meeting at the Korea Press Center in central Seoul, Friday. From left, KB Financial Group Vice Chairman Yang Jong-hee, Hana Financial Group Chairman Ham Young-joo, NongHyup Financial Group Chairman Lee Suk-joon, Financial Services Commission (FSC) Chairman Kim Joo-hyun, Financial Supervisory Service (FSS) Governor Lee Bok-hyun, Woori Financial Group Chairman Yim Jong-ryong, Shinhan Financial Group Chairman Jin Ok-dong and Korea Federation of Banks Chairman Kim Kwang-soo. Yonhap

FSC chief stresses internal control and risk management

By Anna J. Park

Financial authorities have called on major financial group leaders to shield borrowers from the impact of interest rate hikes, urging the companies themselves to absorb the rising costs from global interest rate increases as much as possible.

The message came during a meeting between the financial authorities ― top financial regulator Financial Services Commission (FSC) and financial watchdog Financial Supervisory Service (FSS) ― and chiefs of the country's five major financial groups ― KB, Hana, NongHyup, Woori and Shinhan ― in central Seoul on Friday morning.

It is the first official meeting with the financial regulators since Woori and Shinhan financial groups replaced their chiefs earlier in March. KB Financial Group Vice's Chairman Yang Jong-hee, Hana Financial Group Chairman Ham Young-joo, NongHyup Financial Chairman Lee Suk-joon, Woori Financial Chairman Yim Jong-ryong and Shinhan Financial Group Chairman Jin Ok-dong attended the meeting.

"Although there have been various attempts to lower interest rates for new loans, consistent efforts to keep interest rates low will be necessary," FSC Chairman Kim Joo-hyun said during the meeting. "We are asking the financial groups to absorb factors that push market interest rates upward as much as possible within companies through increasing management efficiency, in order to minimize the interest rate hikes being passed on to borrowers."

The head of the top financial regulator also highlighted the importance of the financial groups establishing proper internal control systems. While he encouraged some financial companies' voluntary moves to improve their internal control systems, he said the government plans to strengthen its risk management legal framework placing clear responsibilities on the executives of financial firms.

"The recent bank crisis in the U.S. and in Europe shows how important it is to earn customers' trust in matters of sound internal controls and risk management capabilities," the FSC head said. "The government will introduce a system under which the responsibilities of CEOs and execs will be clearer in the risk factors of their own business units. This will induce positive changes from the current organizational behaviors that seek excessive risks and profits over consumer protection."

The FSC chairman added that the legal revisions to bring the new internal control and risk management systems into the country are currently under examination, and will be announced in the near future.

Financial Supervisory Service (FSS) Governor Lee Bok-hyun, left, Financial Services Commission (FSC) Chairman Kim Joo-hyun, center, and Woori Financial Group Chairman Yim Jong-ryong attend a meeting at the Korea Press Center in central Seoul, Friday. Yonhap

During the meeting, FSS Governor Lee Bok-hyun urged the financial group chiefs to pay extra caution in preparing enough reserves for any possibility of increased financial market volatility within the country and abroad.

The financial group leaders said they'd take full responsibility and help their customers brave the financial difficulties.

"Financial companies' calling is coexistence with society," Hana Financial Group Chairman Ham Young-joo said during the meeting. "As the core of financial business lies in trust and social responsibility, we will make efforts to increase transparency and credibility in management."

Shinhan Financial Chairman Jin Ok-dong and Woori Financial Group Chairman Yim Jong-ryong also expressed their agreement on financial companies' social responsibility and the importance of increasing management transparency.

annajpark@koreatimes.co.kr