Eun Seong-su, Financial Services Commission Chairman, "Savings Banks Must Lower Loan Interest Rates Further" (Comprehensive)

Eun Sung-soo, Chairman of the Financial Services Commission, is speaking at the 'Savings Bank Industry CEO Meeting' held at the Government Seoul Office Building on the afternoon of the 16th.

[Asia Economy Reporter Kim Hyo-jin] Eun Sung-soo, Chairman of the Financial Services Commission, urged on the 16th that "(Savings banks) should strive to supply funds to middle- and low-credit borrowers at interest rates lower than the current ones."

Chairman Eun made this remark at the 'Savings Bank Industry CEO Meeting' held at the Government Seoul Office in the afternoon, saying, "Although household credit loan interest rates at savings banks are gradually declining, there are still many criticisms that the rates are high."

He said, "Providing funds at lower interest rates to middle- and low-credit borrowers will enhance customers' repayment capacity, enabling mutual growth between savings banks and customers, and will also strengthen the business foundation of savings banks."

Chairman Eun added, "If savings banks actively fill the interest rate gap of around 10% appearing in the credit loan market, their role as the backbone of the entire financial system supporting low-income people who find it difficult to access banks will be solidified, and they will secure sustainable competitiveness as financial companies for the common people."

He also raised concerns that the role of savings banks as regional financial institutions is weakening as large savings banks' loans are concentrated in the metropolitan area. He urged, "It is necessary to strengthen efforts to supply funds for local low-income people, small business owners, and small and medium-sized enterprises."

Chairman Eun further diagnosed, "Since savings banks mainly serve customers who are relatively vulnerable in repayment ability, they will be the first and most sensitive to domestic and external risk factors." He warned, "If they focus on household loans without thorough credit screening and risk management or concentrate on expanding high-risk, high-return assets, they should be aware and cautious that this could result in repeating past mistakes."

The meeting was attended by Park Jae-sik, Chairman of the Korea Federation of Savings Banks, and representatives from 10 savings banks.

The savings bank representatives proposed regulatory incentives for guaranteed loan products targeting small businesses and small merchants, currently under discussion with regional credit guarantee foundations, and requested consideration of support measures such as financial support from local governments.

They also requested a review of regulatory easing related to mergers and acquisitions (M&A) of savings banks, considering the recent increase in savings bank sales due to poor business performance amid economic slowdown and aging major shareholders, which has made sales difficult.

They asked for revisions to regulations such as the prohibition on savings banks owning other savings banks, the ban on a single major shareholder owning three or more savings banks, and the prohibition on mergers that expand business areas.

The savings bank representatives also requested that the regulation holding savings bank executives jointly liable with the bank for even minor negligence related to deposit liabilities be limited to cases of gross negligence to reduce their burden.