Financial Services Commission-Bank CEOs Meeting: "Actively Promoting Improvement of Ancillary and Concurrent Businesses"

Chairman Kim Juhyun Holds Meeting with Commercial Bank Presidents and Gwangju Bank President

Kim Ju-hyun, Chairman of the Financial Services Commission, stated on the 1st, "We will boldly improve financial systems, including regulatory improvements on ancillary and concurrent business operations."

On the same day, Chairman Kim held a meeting at a restaurant in Jongno-gu, Seoul, with Cho Yong-byeong, Chairman of the Korea Federation of Banks, presidents of the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup), and the president of Gwangju Bank (chairman of the Regional Banks Council), stating, "Policies to promote competition through changes and innovations will continue until the banking industry can satisfy the public's demands."

At the meeting, Chairman Kim expressed gratitude to the banking sector for the KRW 2.1 trillion scale livelihood financial support program and urged the prompt execution of the remaining KRW 600 billion support measures for small business owners and vulnerable groups. Previously, the banking sector had disclosed an autonomous livelihood financial support program worth about KRW 600 billion, including KRW 237.2 billion for contributions to the Korea Inclusive Finance Agency and low-interest refinancing programs.

He also expressed his intention to improve regulations related to ancillary and concurrent business operations, saying, "In the process of actively responding to rapidly changing management conditions, banks are increasing corporate sector funding through future energy funds, venture funds, etc., showing a shift away from past asset management focused on mortgage loans."

Ancillary and concurrent business operations refer to additional financial services beyond banks' core operations such as deposits and loans, including various financial and non-financial services requiring separate permits or registrations. As profitability from core operations declines, banks have been focusing on expanding ancillary and concurrent business operations to enhance customer satisfaction and secure additional profitability. In particular, the recent Hang Seng China Enterprises Index (HSCEI)-based equity-linked securities (ELS) incident in Hong Kong has heightened the need for institutional improvements related to trust and advisory services.

Furthermore, Chairman Kim urged the banking sector to thoroughly prepare for the 'Accountability Structure Diagram' to be introduced with the amendment of the Financial Company Governance Act in July. He said, "Considering what results might have emerged if the accountability structure diagram had been in place during the recent ELS incident will help design an effective accountability structure diagram," and added, "Please make every effort to ensure that the accountability structure diagram becomes a practical solution for improving banks' internal control systems."

In this regard, Chairman Cho said, "Institutional improvements for the development of the banking industry need to be pursued from the perspective of public convenience," and added, "From this perspective, it is necessary for the public and private sectors to jointly consider how to improve existing asset management-related systems such as trust and advisory services in a way that benefits the public's asset formation, and what innovative services banks can provide as comprehensive financial solution providers."

Meanwhile, the Financial Services Commission announced at the meeting that it plans to review the policy tasks proposed by the banking sector together with industry and private experts in the future.